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Mining Boom in DRC Boosts Fortunes of State-Owned Gecamines

By VOA News | Published on July 25, 2007

Gecamines, the Democratic Republic of Congo's troubled state-owned mining company, said it has tackled corruption issues that have plagued the company for decades and is ready to consolidate some of its assets and expand its business. But as Peta Thornycroft reports for VOA from Katanga's capital Lumbumbashi, Gecamines has said it still needs the government to stop creditors from taking it to court in the short term.

Democratic Republic of Congo
The DRC has long been dependent on the state mining company Gecamines which, in its hey-day, was the largest mining operation in Africa. But it has, over decades, been so poorly mismanaged that in 2003 it completely stopped production.

The company, which mainly produces copper and cobalt, once provided two-thirds of DRC's foreign exchange and was the major employer in Katanga province.

Over the years, the World Bank has committed considerable funds to rehabilitate Gecamines. And, 18 months ago the bank appointed a Canadian, Paul Fortin, to head the company. Fortin previously worked in DRC and also layed the groundwork for reorganizing Tanzania's mining industry.

As part of its turnaround strategy, Gecamines sold or donated shares in about 26 developed and undeveloped mining enterprises to private investors, retaining just about 20 percent ownership in most cases.

Fortin says these transactions saved the company from collapse. But now he is determined to stop further privatization of Gecamines' assets so the economy of Katanga province benefits from the turnaround.

"I consider it my job to make it profitable and prosperous, and I cannot do that and sacrifice the workers, or sacrifice the continuity that there is between Katanga and Gecamines," he said.

Fortin says Gecamines is so much part of the people of Katanga and of their history, that they would rather destroy it than see any more of the company stripped away.

"Gecamines is a pulse, it is like a child of the nation, there is a an emotional link, it's about livelihood, all the good things they got came from Gecamines, it provided food, schooling and entertainment, from almost birth to retirement," he said. "That certainly is a model that I cannot reproduce, but they will make sure that it gets something closer to that, than just an independent company producing copper in the field and paying taxes to Kinshasa."

Fortin says he will raise money for the development of the remaining assets on international markets.

"I get lots of calls and lots of visitors who would like to do deals, I have given most of it out, and the little I have I will try and put into production myself," he said.

But Gecamines still owes creditors $2.3 billion, most of it due to state-owned companies such as the railways and power authority. Some $700 million is owed to private sector creditors, and Fortin has asked the central government to create a law to prevent these companies from taking the company to court to get their money.

Fortin says Gecamines can now pay its way, but not if it has to pay off all its private sector debt in the short term; and, he says he needs time to rebuild infrastructure and develop new projects.

Part of Fortin's challenge comes from speculators who bought Gecamines assets at bargain-basement prices and are now trading them without doing any actual mining.

Last week the DRC government deported Zimbabwean businessman, Billy Rautenbach, one of the entrepreneurs who profited massively from mining Gecamines assets he was given during the war. Another Zimbabwean, John Bredenkamp who has in the past been close to high fliers in the ruling ZANU-PF in Zimbabwe, was another beneficiary. He sold his assets a year ago for $60 million, double what mining analysts say they were worth.

There are several other foreign speculators in Katanga buying and selling shares on international stock exchanges and doing little mining.

Fortin says DRC has recently attracted has some key multinational investors who are busy developing claims which he says are world class, state-of-the-art operations. He says this is the kind of investment that will transform Katanga over the next few years.

@Congoplanet |

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