Gecamines of Congo Must Publish Asset-Sale Revenue, IMF Says

Gecamines, the Democratic Republic of Congo’s state-owned copper-mining company, must publish contracts and revenue from recent asset sales under the terms of a government economic program backed by the International Monetary Fund, the multilateral lender said.

Gecamines sold its stakes in two mining projects run by Baar, Switzerland-based Glencore International Plc to companies associated with Israeli businessman Dan Gertler earlier this year. Gecamines didn’t announce the deals publicly at the time and has declined to publish full details of the sales or transfer the proceeds to Congo’s Treasury.

“The obligation to report such information covers all state-owned enterprises, unless such enterprises are explicitly excluded from the program,” IMF Country Director in Congo Samir Jahjah said in an e-mailed response to questions today from Kinshasa, the Congolese capital. “At this time, there are no such exceptions under the DRC’s program.”

Congo holds 4 percent of global copper reserves and is among the world’s largest producers of cobalt. The Central African nation, recovering from more than four decades of dictatorship and war, is in the second year of a three-year, $561 million loan program backed by the IMF to reduce poverty and spur economic growth.

“An important objective” of the program is to generate more revenue to address Congo’s health, education and infrastructure needs, Jahjah said. An “important source” of this revenue is natural resources, he said.

‘Best Practices’

“To generate this revenue, the natural-resource sector must be managed more effectively, in line with international best practices,” Jahjah said. “These practices include strong governance and transparency.”

The IMF asked the government for information on recent asset sales by state-owned companies in its periodic review of Congo’s adherence to its loan program, Jahjah said, without identifying the specific deals. On Sept. 16, both Gecamines and state-owned miner Sodimico sent letters in response to IMF inquiries about recent asset sales by the two companies. The letters were published on the website of Congo’s Mines Ministry.

The controversy over the sales by Gecamines and Sodimico delayed the IMF’s release of the next instalment of its loan to Congo, le Potentiel, a Kinshasa-based newspaper, reported today, citing people it didn’t identify.

No Delay

Jahjah denied there had been a delay in a mobile-phone message today. “The review is proceeding on the timetable envisaged,” he said.

In its response to the IMF questions, Gecamines said it disagreed with an IMF suggestion that the proceeds from a $137 million sale of its share in the Mutanda copper and cobalt project should be transferred to state coffers, in accordance with Congolese law. After the copper and cobalt miner became a commercial company in December, such laws didn’t apply, it said.

“According to the 2008 law on public enterprise restructuring, proceeds from asset sales should go to the Treasury,” Jahjah said.

Albert Yuma, head of Gecamines’ board, had his mobile phone turned off when called for comment today and didn’t respond to a text-message request for comment. Finance Minister Matata Ponyo was out of the country and could not be reached for comment, according to a person who answered the phone at his office.

To contact the reporter on this story: Michael J. Kavanagh in Kinshasa at mkavanagh9@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.

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