Glencore, Randgold form group to challenge Congo law changes
(Bloomberg) — Glencore Plc and Randgold Resources Ltd. are among major mining companies in the Democratic Republic of Congo clubbing together in a bid to stop sweeping legal reforms, claiming their interests were poorly served by the existing industry body.
In a letter sent to Congolese President Joseph Kabila on Feb. 8 and seen by Bloomberg, investors requested a meeting “to once again put forward our positions” about changes to the mining code approved by lawmakers Jan. 27.
The new code will overhaul Congo’s most important economic sector if Kabila signs it, raising the cost of doing business for investors in Africa’s biggest copper producer, while boosting the state’s share of mining revenue.
Investors want the newly created body to replace the Chamber of Mines, which is part of Congo’s main private sector lobby group, after it “was unable to satisfactorily consolidate and communicate our wishes during the re-visitation of the Mining Code,” according to the letter. China Molybdenum Co., Ivanhoe Mines Ltd., MMG Ltd., Zijin Mining Group Co. and AngloGold Ashanti Ltd. also signed the letter.
Glencore, Ivanhoe, MMG, Randgold and China Moly declined to comment. AngloGold and Zijin didn’t immediately respond to requests for comment.
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Kabila’s deputy chief of staff, Jean-Pierre Kambila, told Bloomberg to refer any questions to Mines Minister Martin Kabwelulu. “I am not aware of this letter addressed to the president,” Kabwelulu said by email Feb. 15.
In December, companies including Glencore, Randgold and China Moly said they would defend their investments “by all domestic and international means at their disposal.” Randgold is considering launching international arbitration if Kabila gives his assent to the legislation.
“Watching people shoot themselves in the head, not even in the foot, is frustrating for me,” Randgold Chief Executive Officer Mark Bristow said in an interview in Cape Town on Feb. 5. “The mining environment in the DRC needs to be improved, but improved in consultation with the main investors, which are China Molybdenum, Glencore and ourselves,” he said.
The miners that wrote to Kabila have “decided to formalize our relationship by establishing an association of major mining companies in the DRC,” according to the letter. The existing Chamber of Mines is a sub-committee of the Federation des Entreprises, headed by Albert Yuma, who is also chairman of state-owned mining company Gecamines.
“We would like to place on record that the FEC did not represent the views or analysis presented by its own Chamber of Mines, nor did it consult with our companies and at no stage did it have the mandate to represent our positions,” the letter said.
Consulted by a parliamentary commission as FEC president last month, Yuma said updating the mining code was “necessary,” while FEC members such as Randgold and Glencore have argued against many of the proposed changes.
“Yuma is the guy who’s championed this process,” Bristow said. “He’s the CEO of a bust organization, with all sorts of accusations leveled at him, and he’s saying that he wants more.” Under Yuma’s stewardship, Gecamines has failed to significantly increase copper production and been accused by advocacy groups of selling the company’s best assets below market price and failing to account for how the money was used.
Yuma said he hasn’t seen the letter.
“There are procedures to withdraw from FEC, so they must respect the procedures,” he said by phone from Congo’s capital, Kinshasa. He declined to comment on criticisms that he worked against the FEC members’ interests during the revision of the code, saying he is “neither a parliamentarian nor a member of the government.”
Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director of Glencore.
(Written by William Clowes and Tom Wilson)