Business partnership with China and soaring prices of copper prompts Congo to demand a larger share from the ongoing mining contracts. The Kinshasa government in its report on the review of the country’s mining contracts claimed that companies had made enormous gains without providing comparable benefits to the Democratic Republic of Congo.
The contracts had to be modified immediately to derive justifiable margins owing to higher prices of copper and cobalt. Most of the contracts were signed under unpredictable circumstances after the bloody civil war (1998-2003) which took more than four million Congolese lives. President Joseph Kabila’s administration is understood to bring 61 mining contracts to the re-negotiation table to obtain the desired result.
Mining powerhouses including De Beers, Freeport McMoRan and smaller entities like Anvil Mining, First Quantum Minerals could be affected by the move. China’s interference in the form of development fund and developmental projects in Congo is the other reason suspected for this move. In the month of January this year, the Exim Bank of China pledged financing the major road and rail construction projects in Congo and rehabilitation of its strategic mining sector.
In return, China’s Sinohydro Corp and China Railway Engineering Corp have received a 68 percent stake in a joint venture with Congolese state-owned mining company Gecamines, with rights to two large copper and cobalt concessions. The mineral-rich former Belgian colony‘s infrastructure was devastated by years of civil war and made the country a breeding site for corruption and merciless killings during this period.
Markets responded to the report, the shares of major mining firms operating in Congo including Katanga Mining Ltd., Anvil Mining Ltd., Lundin Mining Corp., First Quantum Minerals Ltd. and Freeport-McMoRan plummeted on fears of current projects’ fate. Congo’s vice-minister of mines Victor Kasongo has allayed such fears by stating that a “brief and open” appeal process will be created to enable fast track renegotiation.
Analysts say that the time is ripe for Congo to go forward with its demand due to the huge shortage of major new copper discoveries and soaring metal prices. The African country holds at least a tenth of the world’s copper reserves and more than a third of the untapped cobalt.