Video: Junior market dominated by ‘the lame, the halt and the blind,’ says Rule
Over two-thirds of today’s junior miners are essentially worthless, says resource speculator Rick Rule.
The Democratic Republic of Congo’s state-owned miner, Gécamines, is seeking to take advantage of the country’s new mining code and revise contracts with its international partners, as it claims the old rules meant foreign firms benefitted more from the country’s riches than local producers.
The company, which is heavily indebted and has consistently failed to meet production targets as of late, said talks on contract revisions should to start in the second quarter and be completed by the end of this year or beginning of 2019.
“We call for a rethink of our past partnerships to enable them to achieve the only purpose for which they were signed: to provide benefits for the state and Gécamines,” Chairman Albert Yuma told a mining conference in Cape Town according to Reuters.
State-owned miner says existing deals have not given Gecamines or the state a ‘sufficient share’ of the nation’s mineral wealth.
The Lubumbashi-based miner has repeatedly said that many of its partnerships with foreign miners have provided no dividends even though Congo is Africa’s biggest copper producer and the world’s largest source of cobalt.
Some of the company’s international mining partners include major names such as Glencore, China Molybdenum and Ivanhoe.
Gécamines has also argued it had been investing revenues from its partnerships on reviving its own commercial production, but output figures don’t reflect that.
The Congolese miner produced about 20,000 tonnes of copper in 2010 and only about 10,000 tonnes in 2016, according to the central bank, after a brief spike in 2012 and 2013. Production reached roughly 500,000 tonnes a year in the mid-1980s before under investment and years of war led to the near total collapse of the company’s output.
In November, the Carter Center, a US-based advocacy group, published a report showing that almost $750 million allegedly paid by international mining companies to the state-owned miner between 2011 and 2014 were missing from its accounts.
Such figure is equivalent to almost two-thirds of the $1.1 billion in partnership revenue Gécamines should have received, according to the analysis based on a review of contracts, corporate records, public statements and more than 200 interviews in which the Carter Center based its report.
Congo’s new mining code, passed by both houses of parliament last month, is already generating major opposition from the industry as it raises royalties and taxes. However, it still has to be signed into law by President Joseph Kabila.
