Global Witness on Monday revealed that Gecamines, the state mining company of the Democratic Republic of Congo last year signed over royalty rights in the Kamoto Copper Company (KCC) owned and operated by Switzerland’s Glencore to offshore company African Horizons which is linked to with Dan Gertler, Israeli financier who has extensive dealing in the DRC.
The London-based human rights organization claimed under the deal struck in January last year, the 2.5% royalty stream from KCC that was owned Gecamines could generate as much as $880m for African Horizons and in turn Gertler’s Fleurette Group. KCC mining and processing were suspended in September 2015 for refurbishment and expansion. The expansion project has the potential to nearly double current annual production to some 300,000 tonnes of copper and cobalt.
MINING.com was contacted by Powerscourt, a London-based firm acting as spokespeople for Fleurette, who contested some of the information in the Global Witness piece, particularly the $880 million figure cited by Global Witness as “equal to the DRC’s total health budget”.
Powerscourt told MINING.com that “the fact that the estimated royalty stream from a 2012 report may or may not add up to the DRC’s annual health spending is a deliberately misleading claim made by Global Witness:”
“The value of a royalty stream is a complex calculation, based on discounted cash flow and net present value. In this case, Fleurette paid Gecamines a sizeable sum for the royalty steam enabling Gecamines to realise value in an asset immediately – for the benefit of the state.
“The project royalty stream from the 2012 report is irrelevant – not least as KCC has been suspected for 18 months and counting. [MINING.com] cites the GW release which claims the royalty could generate “as much as $880m when KCC goes back into production”. This is also misleading, as Global Witness knows full well. The $880m figure includes royalties paid in 2012, 13, 14 and 15. It is not a forward looking estimate, and given the suspension, irrelevant.”
See below for Powerscourt’s full statement. Click here for Global Witness press release:
Agree with Fleurette. The way the article read was that the royalties was not paid for just signed over. I was very confused for no reference to the other side of the deal. Watchdogs are needed. An incompetent or preconceived self serving watchdog is not only dangerous but is killing its right to exist.