Eurasian Resources denies circumventing Congo subcontracting laws

Kazakh miner Eurasian Resources Group (ERG) has denied accusations it tried to bypass Democratic Republic of Congo’s subcontracting laws designed to boost local ownership in the mining sector, job creation, and benefits to the country’s economy.

In a statement published last week, Congo’s government accused ERG of passing off nine subcontracting companies as majority partners with “fictitious” shares in order to circumvent legislation requiring that Congolese shareholders own 50% of subcontracting shares.

The Regulatory Authority for Subcontracting in the Private Sector, a government body, said that more than $535 million in sales had wrongly gone to foreign-owned subcontractors in 2023.

It said it would “take appropriate measures followed by exemplary sanctions” against what it described as the “proven cases of fraud.”

The fraud has been discovered within ERG’s assets Metalkol, Comide, Frontier, Boss Mining and its subcontractors Rocada, Roche Solide, Standar Fiable, Technologies Global, Etalon SA, Surtek, Socom, Transversal and Vision, the regulator said.

On Wednesday, ERG responded to the accusations, stating that the subcontractors were not directly associated with it.

“ERG categorically denies any involvement in illicit activities,” the company said in a statement, adding that it has been exchanging information with the regulatory authority.

Luxembourg-Based ERG is owned jointly by 3 private shareholders and the government of Kazakhstan which has the remaining 40% stake.

The firm is addressing identified discrepancies in contracts with suppliers found ineligible under applicable laws, and actively seeking alternative suppliers, ERG said.

Congo state miner Gecamines said in February it had made an offer to buy three of ERG’s copper and cobalt assets in the country.

(By Ange Kasongo, Felix Njini, Sonia Rolley and Portia Crowe; Editing by Anait Miridzhanian and Elaine Hardcastle)