DRC offers some clarity on renegotiations12 June 2008Source:...

DRC offers some clarity on renegotiations

12 June 2008
Source: eSource Canada Business News Network

If uncertainty truly is one of the greatest foes to the flow of capital than companies with large stakes in the Democratic Republic of Congo can take some solace from the most recent government edict that promises less of it in the near future � even if the benefice of that certainty remains in doubt.

The deputy minister of mines, Victor Kasongo, announced that
the renegotiation process of the 61 mining contracts that had come under review in the last year will begin in mid-July. The entire mining review process has hung over foreign miners in the country for most of the last year, as a special commission worked at slotting mining contracts into three categories: those not needing renegotiation, those needing it, and those that were to be declared
illegal.

In March of this year it announced that no projects fell into the desirable first category, with the bulk of projects falling into the second.
The task force charged with righting the perceived wrongs of those contracts is made up of senior government ministers and met on June 11.The government says the group will receive legal and technical assistance from foreign auditing firms and a clear nod to NGOs in the regions who have expressed concern that the renegotiations themselves
could wind up being an opportunity for governments to replace deals that unfairly fattened corporations, with deals that unfairly fatten certain officials and select business men in the country.

Back in March, Kasongo said renegotiation was necessary after the review uncovered internal rates of return far above global norms and "beyond all reasonable requirements to cover understandable political and other risk concerns or to compensate for any realistic drop, however dramatic, in the market price of metals," he said at the time.

That sent waves of worry through major, mid-tier and junior mining players alike in the country. Some politicians too came down on the side of foreign companies arguing that the lack of transparency and the slowness of the process had hurt development in such key mining areas as the Katanga province.

But the need for a thorough review of older contracts did not come without cause. The consensus amongst experts in the region is that many of the deals done in the aftermath of the country's bloody war resulted in corrupt pay-offs to members of the ruling clique and sweetheart deals
for some companies.

A senior member of the commission told media outlets back in March that "the problem with nearly all of these contracts is that they were signed under duress or were not clearly evaluated and therefore offer no economic or financial benefits to the country."

And while some forces in the country don't want done-deeds
revisited, continuing pressure from Western donors and the World Bank for greater transparency in the mineral sector has resulted in a commission that has acted more independently and with greater integrity than many onlookers had originally anticipated.


Congo to start mines renegotiations in mid-July
By Joe Bavier
12 June 2008

Source: Reuters News

KINSHASA, June 12 (Reuters) - Democratic Republic of Congo will begin renegotiating some 60 mining contracts in mid-July as part of a long-delayed review process, the central African nation's deputy mines
minister said on Thursday.

"We plan to start the renegotiation process in mid-July. And we hope it will go faster. Everyone wants to finish this," Victor Kasongo told Reuters. The renegotiations would be carried out by a mines review "task force" of senior ministers.

President Joseph Kabila's government launched a review last year of 61 mining contracts, many signed during the country's 1998-2003 war.

A government mines review panel released a report in March
recommending the renegotiation of a string of major mining contracts in the vast former Belgian colony.
This included contracts between state mining companies and mining majors BHP Billiton , Freeport McRoRan Copper & Gold Inc and diamond giant De Beers.

Kasongo said the task force, established after the publication of the review panel's report, met for the first time on Wednesday and was seeking legal and technical assistance from foreign auditing firms.
However, he said the government was still raising the funds needed to proceed with the renegotiation. "Many small companies still owe money to the state. We're calling for them to pay that money, which we will use to pay the (auditing) firms," Kasongo said.

Interest in Congo's once mighty mining sector, which has a tenth of the world's copper reserves and a third of its cobalt, has boomed since 2006 elections, meant to draw a line under years of conflict and decades of mismanagement.
However, watchdog groups have criticised it for a perceived lack of transparency. Many, including the governor of Katanga province, Congo's mining heartland, say repeated delays hindered development in the sector and deterred investors.

Kasongo did not say how long he expected the renegotiation to last.