June 14, 2018 / 11:15 AM / 5 months ago

UPDATE 2-Congo miner Gecamines plans to renegotiate with foreign partners

* Gecamines chairman says partnership revenue too low

* Congo has taken increasingly hard line with foreign miners

* Companies have threatened legal action to retain exemptions (Adds Randgold CEO comments)

By Fiston Mahamba

LUBUMBASHI, Democratic Republic of Congo, June 14 (Reuters) - D emocratic Republic of Congo state miner Gecamines has called on its foreign partners to renegotiate the terms of joint ventures it considers to be unfair, its chairman said on Thursday.

Heavily in debt and with dwindling output, Gecamines has long complained about its joint venture terms. It launched a contracts audit in 2016 and is now ready to sit down with its international partners to thrash out better deals.

“If our partners think that operations bringing in 2.5 percent in royalties to the state are sufficient, they are mistaken,” Albert Yuma told a mining conference in the southeastern city of Lubumbashi.

“We will use all legal means to reclaim our rights,” he added, complaining that Gecamines’ partnerships have not brought in sufficient revenue to the Congolese state.

Yuma’s comments followed the announcement on Tuesday that Gecamines had dropped legal proceedings against Glencore subsidiary Katanga Mining aimed at dissolving their Kamoto copper and cobalt joint venture.

As part of the deal, Katanga agreed to a debt-for-equity swap that will cut Kamoto’s debts by more than half and to pay Gecamines about $190 million.

Congo is Africa’s top copper producer and the world’s leading miner of cobalt, the price of which has surged over the past two years because of its use in batteries for electric vehicles.

HARD LINE

Congolese authorities have taken a hard line with foreign miners in recent months as they try to capitalise on high commodity prices. In March President Joseph Kabila signed a new mining code that increases taxes and royalties and cancels exemptions.

Major companies operating in Congo, including Glencore, Randgold and Ivanhoe, have threatened legal action if the government does not respect 10-year exemptions granted under the previous code against changes to the fiscal and customs regimes.

Randgold CEO Mark Bristow appeared to strike a more restrained note at the conference, saying that the new code “breaks down trust” but that mines in Congo could succeed in spite of it.

Yuma also said that Gecamines’ Deziwa joint venture with China Nonferrous Metal Mining (CNMC) would produce 80,000 tonnes of copper next year.

Gecamines has reached a revenue-sharing agreement with an unidentified Chinese company to develop the Kilamusembo copper and cobalt mine, he added.

Since its heyday in the 1980s, when it produced close to 500,000 tonnes of copper a year, Gecamines has fallen heavily into debt and last year produced less than 16,000 tonnes of copper. (Reporting by Fiston Mahamba Writing by Aaron Ross Editing by Edward McAllister and David Goodman)

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