Albert Yuma-Mulimbi, chairman of Congo La Générale des Carrières et des Mines (Gécamines), the state-owned mining company in the Democratic Republic of Congo, has revealed an ambitious growth strategy which if successful, could see the company emerge as one of the largest mining companies in Africa, and possibly the world, he tells Laura Cornish in an exclusive interview in London.
Yuma-Mulimbi took up the position of chairman at Gécamines five years ago and at the time was presented with a daunting task – rescuing a company which on many occasions faced imminent bankruptcy thanks largely to an almost non-existent production profile (outside of its minority joint ventures in the country).
But today, having overcome the great difficulty of helping the company’s management body to recognise the need for change, the chairman has established a solid foundation upon which a new Gécamines will grow and re-establish itself as a “great mining company” which although still owned by the government, is now controlled by a fully independent board. “Changing the mentality of the company and bringing into the business best practice methods and international standards has been extremely challenging, but extremely rewarding to overcome,” Yuma-Mulimbi states.
Ambitions set in motion
With a “disappointing minority joint venture set-up” business structure which is costing Gécamines millions of dollars to review and audit, Yuma-Mulimbi is looking to implement a completely different structure which will see the company retain full ownership of its assets or at least a significant portion with new joint venture (JV) partners. “We own the mining rights to 18 000 km2 of mining concessions in the northern parts of the DRC which in addition to copper and cobalt include gold, iron ore, zinc, nickel, coltan and even geranium,” he reveals. And while the initial focus is growing the core business copper/cobalt production profile quite significantly, Yuma-Mulimbi intends to take advantage of Gécamines’ full metal suite with particular focus on gold, nickel and zinc.
Expanding on his aspirations and immediate strategy, Yuma-Mulimbi declares the company will be producing 125 000 tpa of copper within the next three years from its non-JV production line. In 2015 Gécamines produced only 15 000 t of copper and just less than 8 000 t in 2014. “We will achieve this by increasing the scale of our operations while bringing in new equipment and new management structures as well. But we are already, literally, increasing our copper production every month,” he shares. With this plan already in motion the chairman expects to produce approximately 50 000 t of copper in 2017 and 75 000 t of copper in 2018 in order to reach its goal a year later. Delivering on a major copper production strategy is only the first phase of growing the Gécamines business.
“We want to explore and define all our current resources to a JORC-compliant standard after which we’ll be in a position to successfully raise money in the market and build our way to becoming one of the biggest mining companies in the world. And because the DRC is blessed with such high grade deposits (2.5 – 4% copper grades), we will comfortably defy weaker price environments and successfully deliver on this aspiration within the next five or six years, especially as copper demand from China ramps up and provisional production cut-backs lead to a supply shortfall.”
In line with this, Gécamines recently signed a memorandum of understanding (MOU) with a Chinese company to finance the exploration and certification of all its concessions, understood at this stage to contain up to 12 Mt of copper alone. One of its mining concessions in Musonoi for example, according to historic data, is a 5 Mt reserve which needs to be properly certified. In return for its work, the Chinese company will earn a 30 – 40% interest in any projects delivered on the concessions but will return its stake back to Gécamines within an 8 – 10 year timeframe. “This is the strategy we will implement moving forward with all new projects,” Yuma-Mulimbi highlights. The company has in fact already signed a joint venture agreement with China Nonferrous Metal Mining Group to build a copper-processing plant with an initial capacity of 80 000 tpa at its flagship 4.5 Mt Deziwa concession. “Ultimately, we envision a 200 000 tpa operation here.”
The fair share
Gécamines has 16 minority stake JVs in the DRC, including a 20% stake in the Tenke Fungurume operation. The mine’s two long-term owners, Freeport-McMoRan and Lundin Mining, have both recently divested their stakes in the operation to Chinese companies China Molybdenum and BHR Partners respectively.
Yuma-Mulimbi expressed his deep dissatisfaction over the deals with the two companies, saying they both ignored Gécamines’ pre-emptive rights to buy the stakes. “They have shown no respect for us and certainly did not yield the dividends that were owed to us over the years, which is the case with all our JVs.” The JV audit will reveal if the DRC company has been treated ‘fairly’ as a minority shareholder in all 16 of its shareholdings.
Gécamines had taken its case to an international court in Paris in an attempt to block the Freeport deal. “Ultimately, we will not find ourselves in this position with any new projects we develop in our portfolio moving forward,” Yuma Mulimbi reiterates. “Gécamines is after five years in a position to grow its business and implement the strategy we have designed to return the company to its former heyday. This could potentially include listing on a stock exchange and seeing the government divest of its stake in the company as well.” MRA