February 5, 2018 / 5:08 PM / 17 days ago

UPDATE 1-Congo's Gecamines wants to revise contracts with mining partners

* Gecamines wants renegotiations to start in second quarter

* Congo is Africa’s biggest miner of cobalt, copper

* Foreign investors raise concern about new mining law (Updates with comments from interview, Ivanhoe reaction)

By Barbara Lewis

CAPE TOWN, Feb 5 (Reuters) - Democratic Republic of Congo’s state mining company Gecamines said on Monday it wanted to start renegotiating contracts with its international partners to secure a bigger share of revenues and would seek international arbitration if they refused.

Congo is Africa’s biggest copper and cobalt producer and also mines gold and diamonds, but it is one of the world’s least developed countries with an annual budget of roughly $5 billion.

Parliament passed a new mining code last month to raise royalties and taxes, prompting international miners to say it would deter foreign investment. President Joseph Kabila has yet to sign the new law.

Gecamines’ partners include Glencore, China Molybdenum and Ivanhoe Mines.

There was no immediate comment from the miners about Gecamines’ call for new talks on contract terms.

Gecamines Chairman Albert Yuma told a mining conference in Cape Town that talks on contract revisions should start in the second quarter, once an audit had been finalised, and should be completed by the end of 2018 or the start of 2019.

Yuma did not name any companies, but he told Reuters on the conference sidelines that he expected Gecamines partners to agree to hold negotiations.

“I think they are reasonable and will agree to negotiate. I start with the principle they are reasonable people,” he said, adding that Gecamines would seek international arbitration if any companies refused.

In his speech to the conference, Yuma said existing deals did not give Gecamines or the state “a sufficient share” of the nation’s mineral wealth.

“This imbalance is mainly the result of a history that has placed our state in a difficult situation and forced it to negotiate in a weak position,” he said.

“We therefore call for a rethink of our past partnerships to enable them to achieve the only purpose for which they were signed: to provide benefits for the state and Gecamines.”

GATHERING EVIDENCE

Gecamines, which is heavily indebted and has consistently failed to meet production targets, has carried out contract audits in the past but has not revealed the results.

This time, Yuma said he had gathered the evidence and the work was completed on four companies, which he did not name, saying it was only fair to disclose all the findings together.

Regarding the new mining code passed by parliament, Ivanhoe Executive Chairman Robert Friedland said in a statement that if it became law there was “the distinct possibility of unified, industry-led actions”. He did not give details.

Friedland, whose statement did not touch on Gecamines call for new talks on contracts, is to address the Cape Town conference on Wednesday regarding the new code.

Glencore declined to comment on Yuma’s remarks. China Molybdenum could not immediately be reached.

Since its heyday in the mid-1980s, Gecamines has sold most of its assets and entered joint ventures with foreign partners, which include 12 joint ventures and five mine leasing contracts.

The U.S.-based Carter Center said in a report in November that Gecamines failed to internally register $750 million in income between 2011 and 2014, and that much of this was now untraceable. Gecamines denied the charge.

Elisabeth Caesens, director of Resource Matters, a Brussels-based group that advocates better resource management, said any renegotiation had to ensure all Congolese people benefited.

She said Gecamines had “little to show for the hundreds of millions it collected from the previous contract renegotiations in 2006-2009”.

Gecamines says international non-governmental organisations have overstated the firm’s revenues while understating its contributions to the national treasury. (Editing by Aaron Ross and Edmund Blair)

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