DRC offers some clarity on renegotiations

If uncertainty truly is one of the greatest foes to the flow of capital than companies with large stakes in the Democratic Republic of Congo can take some solace from the most recent government edict that promises less of it in the near future even if the benefice of that certainty remains in doubt.

The deputy minister of mines, Victor Kasongo, announced that the renegotiation process of the 61 mining contracts that had come under review in the last year will begin in mid-July.

The entire mining review process has hung over foreign miners in the country for most of the last year, as a special commission worked at slotting mining contracts into three categories: those not needing renegotiation, those needing it, and those that were to be declared illegal.

In March of this year it announced that no projects fell into the desirable first category, with the bulk of projects falling into the second.

The task force charged with righting the perceived wrongs of those contracts is made up of senior government ministers and met on June 11.

The government says the group will receive legal and technical assistance from foreign auditing firms a clear nod to NGOs in the regions who have expressed concern that the renegotiations themselves could wind up being an opportunity for governments to replace deals that unfairly fattened corporations, with deals that unfairly fatten certain officials and select business men in the country.

Back in March, Kasongo said renegotiation was necessary after the review uncovered internal rates of return far above global norms and “beyond all reasonable requirements to cover understandable political and other risk concerns or to compensate for any realistic drop, however dramatic, in the market price of metals,” he said at the time.

That sent waves of worry through major, mid-tier and junior mining players alike in the country. Some politicians too came down on the side of foreign companies arguing that the lack of transparency and the slowness of the process had hurt development in such key mining areas as the Katanga province.

But the need for a thorough review of older contracts did not come without cause.

The consensus amongst experts in the region is that many of the deals done in the aftermath of the country’s bloody war resulted in corrupt pay-offs to members of the ruling clique and sweetheart deals for some companies.

A senior member of the commission told media outlets back in March that “the problem with nearly all of these contracts is that they were signed under duress or were not clearly evaluated and therefore offer no economic or financial benefits to the country.”

And while some forces in the country don’t want done-deeds revisited, continuing pressure from Western donors and the World Bank for greater transparency in the mineral sector has resulted in a commission that has acted more independently and with greater integrity than many onlookers had originally anticipated.