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Congo government warns Gecamines over asset sales

Industry News 01:21:19PM Oct 21, 2013 Source:SMM

Fri, 18 Oct 16:26:00 GMT

(Repeats to additional subscribers)

* Gecamines plans to sell stakes, raise capital for projects
* Minister warns against unauthorised sale, ceding of assets
* Minister mentions planned sale of 20 pct stake in KCC

By Pete Jones

KINSHASA, Oct 18 (Reuters) - Congo's government has issued state mining firm Gecamines a stern warning against selling the country's assets without its approval, highlighting concerns over the transparency of mining deals in the mineral-rich nation.

The move could block a reported proposed sale of Gecamines' 20 percent stake in Kamoto Copper Company (KCC) to Fleurette Group, a company controlled by Israeli investor Dan Gertler. KCC is controlled by Glencore Xstrata .

In an Aug. 30 letter to Gecamines, seen by Reuters on Friday, Mines Minister Martin Kabwelulu said several deals had been struck without his ministry and other relevant government departments being informed.

Kabwelulu said Gecamines should "strictly observe the principles of transparency and the publication on the mining ministry website ... of the assignment of projects or sale of Gecamines' mining assets," and keep the ministry informed.

"I warn you that Gecamines executives would be held directly responsible for any unauthorised move to cede or sell assets," Kabwelulu said.

In the letter, which was copied to the president, prime minister and finance and budget ministries, Kabwelulu specifically referred to a proposed sale of Gecamines' stake in KCC to Fleurette Group.

A spokesman for Fleurette Group said: "We don't comment on market speculation and we will not be commenting on this story."

Gecamines confirmed in a statement on Friday that it was seeking to sell its stake in KCC, which could become Congo’s biggest mine by 2014.

"The decision taken by Gecamines' board to initiate this process is consistent with our strategic development plans and raising the funding required to implement such plans," Albert Yuma, Gecamines chairman of the board, said in the statement.

Gecamines is seeking to raise cash for new infrastructure and plants in order to accelerate new production expected to reach 100,000 tons of copper in 2016, it said.

Congo's vast mineral wealth is often cited as a major cause of cyclical violence in the east of the country, where armed groups compete for control of lucrative mining sites.

Copper-rich Katanga has been spared the worst of the violence but critics say murky deals have fuelled corruption.

Gecamines has been criticized by the International Monetary Fund for a lack of transparency in the sale of its mining assets following concerns that stakes in projects had been sold for considerably less than their market value.

The IMF cancelled the transfer of $240 million in loans to Congo in December 2012 following a failure to publish mining contracts. However, the IMF is now ready to discuss a new loans programme, its representative in Congo, Oscar Melhado said.


(Editing by Bate Felix, David Lewis and Patrick Lannin)

((dakar.newsroom@reuters.com)(+221338645076))

 

 

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Congo government warns Gecamines over asset sales

Industry News 01:21:19PM Oct 21, 2013 Source:SMM

Fri, 18 Oct 16:26:00 GMT

(Repeats to additional subscribers)

* Gecamines plans to sell stakes, raise capital for projects
* Minister warns against unauthorised sale, ceding of assets
* Minister mentions planned sale of 20 pct stake in KCC

By Pete Jones

KINSHASA, Oct 18 (Reuters) - Congo's government has issued state mining firm Gecamines a stern warning against selling the country's assets without its approval, highlighting concerns over the transparency of mining deals in the mineral-rich nation.

The move could block a reported proposed sale of Gecamines' 20 percent stake in Kamoto Copper Company (KCC) to Fleurette Group, a company controlled by Israeli investor Dan Gertler. KCC is controlled by Glencore Xstrata .

In an Aug. 30 letter to Gecamines, seen by Reuters on Friday, Mines Minister Martin Kabwelulu said several deals had been struck without his ministry and other relevant government departments being informed.

Kabwelulu said Gecamines should "strictly observe the principles of transparency and the publication on the mining ministry website ... of the assignment of projects or sale of Gecamines' mining assets," and keep the ministry informed.

"I warn you that Gecamines executives would be held directly responsible for any unauthorised move to cede or sell assets," Kabwelulu said.

In the letter, which was copied to the president, prime minister and finance and budget ministries, Kabwelulu specifically referred to a proposed sale of Gecamines' stake in KCC to Fleurette Group.

A spokesman for Fleurette Group said: "We don't comment on market speculation and we will not be commenting on this story."

Gecamines confirmed in a statement on Friday that it was seeking to sell its stake in KCC, which could become Congo’s biggest mine by 2014.

"The decision taken by Gecamines' board to initiate this process is consistent with our strategic development plans and raising the funding required to implement such plans," Albert Yuma, Gecamines chairman of the board, said in the statement.

Gecamines is seeking to raise cash for new infrastructure and plants in order to accelerate new production expected to reach 100,000 tons of copper in 2016, it said.

Congo's vast mineral wealth is often cited as a major cause of cyclical violence in the east of the country, where armed groups compete for control of lucrative mining sites.

Copper-rich Katanga has been spared the worst of the violence but critics say murky deals have fuelled corruption.

Gecamines has been criticized by the International Monetary Fund for a lack of transparency in the sale of its mining assets following concerns that stakes in projects had been sold for considerably less than their market value.

The IMF cancelled the transfer of $240 million in loans to Congo in December 2012 following a failure to publish mining contracts. However, the IMF is now ready to discuss a new loans programme, its representative in Congo, Oscar Melhado said.


(Editing by Bate Felix, David Lewis and Patrick Lannin)

((dakar.newsroom@reuters.com)(+221338645076))