Congo Mining Report Calls for Renegotiating Contracts

A government committee that reviewed some 60 natural resource contracts between the Democratic Republic of Congo (DRC) and foreign companies made its findings public Thursday, to a mixed response. Among the reviewed contracts are those of De Beers, DGI Mining and BHP Billiton.

DRC commission calls to renegotiate diamond mining contracts and reconsider marketing agreements

The Carter Center, which advised the committee, welcomed the review, adding that it confirmed the existence of severe and widespread problems in the mining contracts. John Reboul, counsel at Ropes & Gray, which analyzed five of the major contracts, said they were "some of the most one-sided agreements I have seen in 30 years of practice." 

Third-party analyses point to significant procedural irregularities in the concluding of the contracts, as well as material default in the performance of contractual obligations.

The review states the history of the contracts, their financial details, what rights they provide and responsibilities they require.

The Cater Center has accused the DRC of failing to set clear procedures and of operating with a lack of transparency and an absence of clearly articulated policy. This, it said, leads to an unwillingness of the international community to provide the country with the kind of assistance Liberia and in Zambia have received.

The report recommends renegotiating contracts with diamond miners De Beers, Dan Gertler’s DGI Mining and multi-commodity mining giant BHP Billiton, among others.

The commission recommends assessing the “real contribution” of the parties in the De Beers joint venture; paying Miba 1 percent of turnover as royalties; involving Miba in the daily management of the joint venture and not limiting the exclusivity of marketing services to one partner.

In its conclusions about the contract with DGIM, the report highlights, “The arbitrary setting of the company's shares before the feasibility study” and the exclusive sale of diamonds produced by the joint venture [with Miba]. The commission recommends to “identify and assess the real contribution of [the] parties in order to promote equitable distribution of the shares.”

“None of the contracts met international standards,” Deputy Mines Minister Victor Kasongo said recently about mineral contracts in the country.

“The government of the Republic intends from now on to ensure efficient management and adequate control of the mining sector so that Congolese mines truly and fully benefit the Congolese nation,” the report states.