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Home | Subscribe to Newsletter | RSS/XML | FAQs | Make Mineweb your homepage Search Mineweb: Advanced search HOME # WHATS NEW # GOLD NEWS # GOLD ANALYSIS # SILVER NEWS AND ANALYSIS # PLATINUM GROUP METALS # BASE METALS # DIAMONDS AND GEMS # ENERGY # IRON, STEEL AND FERROUS ALLOYS # JUNIOR MINING # MINING FINANCE AND INVESTMENT # SUSTAINABLE MINING AFRICA ASIA AUSTRALASIA CANADA EUROPE & MIDDLE EAST FORMER SOVIET UNION CENTRAL/SOUTH AMERICA USA FEATURED MINING COMPANIES MINEWEB RADIO CONFERENCES POST A JOB JOBS AVAILABLE Subscribe to our FREE daily newsletter HOME > HOMEPAGE > COMPANY RELEASES COMPANY RELEASES DRC Ministry of Mines contracts review interim status update Tuesday , 16 Sep 2008 The Ministry of Mines of the Democratic Republic of the Congo (the DRC) is pleased to report on good progress as it undertakes the final phase of the Contracts Review. Negotiations between the key parties to a number of the 61 contracts are approaching conclusion, although the Ministry does report that some of the contract holders have yet to come to the table with anything meaningful. H.E. Victor Kasongo, Deputy Minister of Mines, commented, "The process does appear to be working and we have made significant progress so far, although as the deadline of 30 September 2008 approaches, there are still some companies who need to come forward and engage and I urge those whose situations are retrievable to do so, our door is open and we are ready to listen". Two weeks ago Mr Kasongo advised that of the 61 mining companies in the renegotiation process, 14 had already satisfied all the DRC criteria. Others are approaching finalisation and details of these will be made available once negotiations are complete. However, the Government does note that there has been a certain intransigence on the part of some operators to understand that what might constitute a ‘good deal' for them does not necessarily mean that the contracts are a good deal for the DRC. The review process has revealed the extent to which some contracts are not viable or have in some way failed on feasibility, adherence to the Mining Code, or have otherwise not realised the terms of business agreed upon at the outset. One example is the Sengamines operation, which owned the rights over 794 square kilometres of potentially diamondiferous concessions in the Mbuji Mayi region of the DRC, including the Tschibwe kimberlite pipe and several other kimberlitic and alluvial prospects, and is one of the companies which has had its licence revoked. The Sengamines Company has experienced a number of challenges including changes in ownership and management, and it has effectively ceased operations for more than three years, violating the Mining Convention signed with the Government of the DRC. Further audit and official records have identified that only a proportion of the required and contracted investment entered the DRC legitimately, which may shock the shareholders of the operation who assumed in good faith that the management team were executing to plan. Furthermore, the equipment that is in place was not officially imported, and there were a number of failures in corporate governance and reporting which resulted in an overall lack of transparency. Mr Kasongo said, "The Sengamines situation is an unfortunate one for all parties. At its outset there was a sense of optimism and potential, yet the operation was never properly capitalised and started, and for this and a number of other reasons it fell dramatically short of the Mining Code and our own Mining Convention. "We are committed to ensuring that all mining contracts deliver maximum value and ROI for all stakeholders, as well as employment and revenue opportunities for the Congolese people and businesses. When this cannot be identified and realised then we have to follow the letter of the law and revoke the licence concerned. "When mining contracts are awarded, they are intended for active mining, and if no proper activity takes place then nobody benefits other than perhaps some people in the financial markets - we are having to now adopt a firm policy towards the contracts and licences of ‘Use them, or lose them'." - ends - For further information please contact: Bell Pottinger: +44 (0) 207 861 3883 James Doherty: +44 (0)7799 037 279 Notes to Editors 1) The DRC Mining Contracts Review - Explanatory Notes The background · Nearly all 61 DRC mining contracts have been giving the private companies rates of return excessive compared with those of other countries in the region. A major reason was the instability of the DRC when some contracts were entered into. Now stability has returned. So it is time to normalise relations between DRC and the private companies it partners, in order to develop mining in the mutual interests of the Congo citizens and the company shareholders. · The DRC Government received some months ago the findings of the Mining Contracts Review Commission and then notified each party about the resultant criticisms and requirements relevant to that party. · The Government then set up a panel to oversee the negotiations between the private mining companies and the state entities (the "para-statals"), such as Gécamines. What happens next? · The process has now reached an advanced stage. The companies have now been separated into three categories, based on how far they meet, or fail to meet, the required criteria. · GREEN LIGHT COMPANIES: Thus far 14 companies have successfully produced feasibility studies of the future development of the DRC mining assets. On a traffic lights analogy, these "green light companies" are now entering final stage negotiations with the state entities. · ORANGE LIGHT COMPANIES: A further 25 companies are in an "orange light" phase, by virtue of making some though not yet enough progress. They now need to renegotiate and modify their contracts. They have another 12 to 18 months to produce a viable plan for an ongoing public/private partnership. · RED LIGHT COMPANIES: The remaining 22 companies have contracts so far out of line with mainstream international practice as to warrant cancellation. They must now seek to negotiate all over again as from the beginning - rather than to negotiate modifications to an existing contract. At least three of the worst offenders have little chance of retaining a foothold in DRC. · The renegotiation process is about known existing assets. The terms which DRC will insist on for shared ownership of future discoveries of mineral reserves will be based on the standard international practice of countries such as South Africa and Zambia: including a customary 51%/49% share between the parastatals and the private companies. · Also in line with standard international practice, there will be an element of compulsory sub contracting to be given to Congolese owned firms, to increase local employment and family living standards. · However, the shareholding of existing contract companies, although in many instances far less favourable for the DRC and falling short of international comparisons, is not expected to be changed - in recognition of the commitment made by those companies during the substantially less stable periods now past. 2) Mining in the DRC 10 million people or 16% of the Congolese population are directly or indirectly dependent on small scale mining. In the 1980s, the mining sector contributed 25% of total tax receipts, 75% of total exports and 25% of GDP. In 2005, the Congolese government reported USD 27 Mio. tax receipts from the mining sector (2.4% of total fiscal receipts). Furthermore the sector contributed 0.24% of GDP. The DRC is an often cited example of the so-called "paradox of plenty." Extremely rich in natural resources (80% of world wide resources of Coltan, 10% of world wide resources of copper), the population suffers extreme poverty (80% of the Congolese population lives on less than US$ 0.20 a day). |
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| Autor (Datum des Eintrages): | Blanca_die_Haesin (17.10.08 17:23:06) |
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