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Congo’s contract review

Its strategic and economic significance

Maurice Carney (2008-01-17)

http://pambazuka.org/en/category/features/45463

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Maurice Carney analyses the recently-concluded review of Congo's mining contracts and the significance of this process in safeguarding the country's considerable mineral wealth

On par with a resolution to the current conflict in the northeast of the Congo is the mining review process that the Congolese government announced in April 2007. The government initiated a review of some 60 odd mining contracts, established during the period of conflict (1996 – 2002) and the transition (2003 – 2006). The review offers an opportunity for the Congolese government to stop the systematic looting of the Congo. The review is now complete but the government has yet to publish the results. In spite of repeated requests and pressure from civil society to make the review process transparent, the government has kept the process shrouded in secrecy. In early November, the Congolese newspaper, Le Phare [1] published what it claimed to be leaked results of the review, which stated that many of the contracts would be renegotiated or outright cancelled. Reuters [2] also reported that it saw preliminary reports that called for 61 mining contracts to be renegotiated or cancelled. The impact of these news reports was swift and global in scope; publicly traded mining companies with interests in the Congo on the London, Toronto and New York stock exchanges experienced a sudden drop in their stock prices. This provided some insight into the significance of Congo’s resources to investors in the West. Moreover, it begins to explain in part why the Congo, probably more than any other African nation, has been subjected to repeated external intervention. Kwame Nkrumah stated as much in his Challenge of Congo, [3] when he observed that the Congolese peoples’ struggle is both an internal and external one. The forces arrayed against the Congolese are enormous and global in scope. Foreign governments, global mining conglomerates, multi-lateral institutions and local elites all work in concert to control Congo’s fabulous wealth in perpetuity.

Watchdog groups such as Global Witness estimate that 70 percent of Congo’s copper wealth may already by sold-off to foreign mining companies without little discernible benefit to the Congolese people [4]. Billions of dollars have been raised in the financial markets of London, New York and Toronto while the Congolese people suffer from crushing poverty and debilitating and incessant conflict.

According to the Canadian Journal Corporate Knights, some companies stand to gain spectacular wealth at the expense of the Congolese people. Tenke Mining from Canada, who recently merged with the Lundin Group, also from Canada acquired the Tenke Fungurume concession for just $15 million. The mine is reputed to be valued at $60-billion and contains the largest and highest grade of undeveloped copper cobalt deposits in the world [5]. American mining giant Phelps-Dodge, recently bought out by Freeport McMoRan, also has ownership in the Tenke Fungurume deposits. In spite of reports by human rights groups that the contracts around Tenke Fungurume represent one of the most odious in the Congo, the United States government Overseas Private Investment Corporation recently provided risk insurance for Freeport McMoRan’s billion dollar Congolese venture [6].

When Katanga Mining announced its potential merger –worth about $3.3 billion- with Nikanor in early November, its stock price jumped 42 percent. According to Katanga Mining chair, Arthur H. Ditto, the agreement “sets the course to establish one of the largest and most important mining complexes in the world." [7] The remarkable benefits to these companies are clear and unmistakable but when it comes to the people of the Congo, the benefits are hard to find. Corporate Knights says of the Katanga mining agreement with the Congolese government that it “allows a tax regime that appears to offer very little benefit to the Congolese government.” [8] One of the key principals of Katanga mining is Belgian, George Forrest for whom the United Nations prescribed financial sanctions as a result of his participation in the illegal exploitation of Congo’s resources. It was also revealed that George Forrest was a key funder of Joseph Kabila’s political party, People's Party for Reconstruction and Democracy (PPRD) during the 2006 elections. [9] In April 2007, the Congolese newspaper “Le Potentiel” reported that Nikanor got the KOV concession located in the Katanga province in 2005 by promising to lend Gecamines, Congo’s state company 24 million Euros. Le Potentiel noted that should Nikanor sell its rights to the KOV concession, its two principles, Bennie Steinmetz and Dan Gertler would stand to pocket 350 million Euros each without producing a single gram of copper [10] . Nikanor executives say the KOV project represents "the highest grade major ore body in the world." This may explain why the listing of Nikanor on the London’s Alternative Investment Market (AIM) at $1.5 billion represented the largest valuation of any company in history on entry to AIM. Together Katanga Mining and Nikanor have raised over $2 billion for the KOV project, [11]which is about the same amount of the proposed 2007 Congolese government budget.

Clearly with the hundreds of billions of dollars at stake, renegotiation or cancellation of any of the contracts mentioned above is highly unlikely and potentially as risky as the conflict in the east for the Kabila government. The Congolese people are watching to see whose interests the government will serve. The results from the contract review process will serve as one of the key determinants to the relationship between the Kabila administration and the people of the Congo for the duration of his tenure as head of state. However, one must say that there is little chance that Kabila will act in the interest of the people of the Congo. Many observers believe that if it were not for the insistence of long-time nationalist and current Prime Minister who served as Deputy Prime Minister to Lumumba in 1960, Antoine Gizenga the mining review process may not even have been initiated in the first place. Now that the review is complete, the Kabila government finds itself in a quandary regarding the publication of the report’s contents, knowing that the people of the Congo are being vigilant in regard to the future of their country’s wealth.

When one contemplates the corporate and foreign political forces, as have been outlined in this article and elsewhere, surely the most casual observer would say that the die in all likelihood has already been cast for the Congolese people to be impoverished for generations to come. The international finance community is determined to consign the people of the Congo to pauperization, dependency and perpetual supplier of raw materials for the West’s economic benefit. In fact, a key reason Kabila received unconditional support from the West prior to the 2006 elections, is because he had made it clear to them that he would facilitate unfettered access to Congo’s riches and preside over a client regime. Kabila infamously stated “I invited the business community to go into the Congo just like Stanley did way back in the 1800s and I told the business community back then that they had to have a spirit of adventurism - go see what is happening look at the opportunities and of course install yourself.”[12] The arrogance with which these western forces and their local sycophants are moving, one gets the sense that they feel entitled to the wealth of the Congo even as the soil of the Congo is drenched with the blood of its sons and daughters. There is a callous disregard for the at least 4 million Congolese who have perished in the current scramble for the country’s riches. It appears that the devaluation of the African people, the Congolese in particular has been normalized to the point where millions dead and hundreds of thousands of black bodies raped and sexually mutilated while local elites and multi-national corporations enrich themselves hardly register a whimper of indignation or protest.

As people of conscience, we must do our utmost to expose one of the greatest heist of the 21st century and provide solidarity to those Congolese who have been waging a historic fight for genuine independence, democratic rule and control of their country’s resources. Anything less makes us co-conspirators in the devaluing of our self-worth as Africans and the debasing of our sense of dignity as human beings. The words of Che Guevara are ever present and relevant when he asserts, “The Congo problem is a world problem. Victory will be continental in its reach and its consequences and so would defeat.”[13] Should one agree with Guevara, Nkrumah, Fanon and others who spoke of the significance of the Congo to the future of Africa, people throughout the African world must:
1. Aggressively raise awareness about the situation in the Congo
2. Determinedly mobilize global support on behalf of the Congolese people
3. Doggedly resist corporate appropriation of the Congo’s wealth
4. Actively support progressive forces and civil society in the Congo

* Maurice Carney is Executive Director of Friends of the Congo

*Please send comments to editor@pambazuka.org or comment online at www.pambazuka.org

* Please click on the link for the article notes
Notes:

1. A Congolese newspaper (http://www.lepharerdc.com)
2. http://www.reuters.com/article/email/idUSL038482120071103?sp=true
3. Kwame Nkrumah. Challenge of Congo, PANAF Books,1960.
4. Global Witness, "Digging in Corruption: Fraud, Abuse and Exploitation in Katanga's Copper and Cobalt Mines," July 2006, p. 37.
5.http://www.corporateknights.ca/content/page.asp?name=OECDmatrix. June 5, 2006
6. http://www.state.gov/r/pa/prs/ps/2007/oct/94456.htm
7.http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article2820766.ece
8.http://www.corporateknights.ca/content/page.asp?name=OECDmatrix
9. Op cit. Global Witness p.52
10. Le Potentiel. "Mines et contrats léonins au Katanga: Des maffieux gagnent des millions d'eurosLe Potentiel" April 6, 2007
11.http://findarticles.com/p/articles/mi_qn4158/is_20060713/ai_n16529131Nikanor becomes AIM's largest float Independent, The (London), Jul 13, 2006 by Saeed Shah
12.http://www.youtube.com/watch?v=NWwGQZa8kVc
13. by Ernesto "Che" Guevara, Aleida Guevara March, Patrick Camiller (Translator), Patrick Camiller (Translator), The African Dream: The Diaries of the Revolutionary War in the Congo. Grove/Atlantic, Inc., September 2001

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