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Katanga copper DRC
Base Metals  
24 November 2017

Gecamines retaliates against ‘derogatory’ report

The DRC’s state-owned mining firm Gécamines (Gecamines) has retaliated against a US-headquartered non-governmental organisation for defamatory statements made against it.

On 3 November 2017, the Carter Center (which advocates human rights and democracy) published a report titled “A State Affair: Privatizing Congo’s Copper Sector”.

This report, purported as a critical review of the mining sector in the DRC, turns out to be a mere incriminating report against Gecamines the mining firm states.

After having taken the time to meticulously analyse the terms of this report, Gécamines notes that the main grievances against it are the following:

  • Gecamines would receive and spend important sums of money, without real internal or external control mechanisms;
  • Gecamines would not significantly contribute to the state’s budget, or to its own recovery;
  • Gecamines would even use these sums for wrong purposes; or even
  • Gecamines would be benefiting from a derogating treatment.

In reality, the Carter Center shows three fundamental weaknesses through this report:

  1. A conveniently approximate use of figures and statistical data

The report relentlessly tries to demonstrate that some revenues would be incompletely declared.

However, all of the revenues received by Gecamines over the relevant periods are faithfully transcribed into the accounts of the company.

The calculations put forward by the Carter Center to demonstrate an alleged disappearance of US$750 million, which are based on the EITI declarations and payments publicly declared by partner companies, are therefore wrong.

Gecamines intends to rectify the major errors and mis-truths contained in the report:

  • The revenues of the partnerships for the 2009-2014 period amount to $1,294,125,346(or around 281 million wrongly attributed to Gecamines).
  • Gecamines’ contribution to the state’s budget over the 2009-2014 amounts to $372,122,443 or 28.5% of the revenues of its partnerships (100 times the figure stated in the report).
  • Between 2010 and 2014, Gecamines invested a total amount of $860,873,898, in particular for the acquisition of strategic assets, the realisation of directly productive investments, as well as the certification of reserves to prepare future projects.
  • Between 2010 and 2014, the indebtedness of Gecamines has been reduced by 10%, Gecamines not having, in any event, benefited from a debt settlement.
  • The Board of Directors inherited, when it arrived in November 2010, from a social debt backlog amounting to $51,299,957. This sum has been 100% settled for the enforcement workforce and up to 93% for the executive workforce. If it is true that there has been some tensions relating to salaries in 2014-2015, period corresponding to the end of the world super-cycle for raw materials where main mining actors discharged a large part of their employees, which Gecamines did not do, these salaries have been catch-up the following year.
  • Since 2015 (period which is not covered by the report), Gecamines is the only company of the State’s portfolio which has set up a retirement support plan, which to date allowed 2,294 agents to benefit from their final account. This effort represented, as of today, a mobilisation of $45 million.

Gecamines regrets that the Carter Center is uttering as serious allegations against it, supposed to base the world’s public opinion, on the basis of estimates which turn out to be erroneous.

The company wants to remind that it accounts for at any time to its sole shareholder, which controls its action and is duly represented within the company’s corporate bodies.

Concerning control and transparency mechanisms within the company, Gecamines reminds once again that its financial statements are not only certified by an auditor, but also audited by the largest audit firms in the world.

2. A partial and oriented description of the status of Gecamines

The report attempts to demonstrate that Gecamines would enjoy derogatory privileges, disrupting competition between mining operators. On this very last point, the company first wishes to recall that almost all of the mining production is handled by external partners of the DRC, which is enough to demonstrate the minimal impact of Gecamines on competition between operators.

For the remainder, Gecamines only acknowledges that the report does not even try to put into perspective the mission of a national company like itself, given the preeminence of the mining sector in the DRC. It would be easy to establish that in other countries in which the Carter Center does not seem to be interested, national companies of comparable strategic importance would not have a different position.

  1. An ideological vision of the mining sector in the DRC

The report outlines the Carter Center’s ideological vision of how to organise the mining sector in a country like the DRC, in particular by recommending to Gecamines to shift from a producer to a minority stakes portfolio manager, instead of making serious proposals for an ambitious industrial policy.

What the report does not say is that such a recommendation, made and implemented for almost

15 years, has already led to the impoverishment of the DRC, through the diversion by external partners of the revenues from the exploitation of its mineral resources.

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