Dec. 3 (Bloomberg) -- The International Monetary Fund said it halted the Democratic Republic of Congo’s $532 million, three-year loan program after the government failed to publish details of a 2011 mining deal.
The lender, based in Washington, had asked the government make public the contract for the June 2011 sale by state-owned copper miner Gecamines of its 25 percent in the Comide Sprl copper project to a British Virgin Islands company called Straker International Corp. The government only published notes on the sale, which the IMF deemed insufficient, Oscar Melhado, the IMF’s resident representative in Congo, said in a phone interview today from the capital, Kinshasa.
“We applied the concept of strict conditionality because we believe that transparency in the mining sector is key for the country,” he said. Congo will lose out on three loan disbursements worth a total of about $225 million, he said.
Congo, a Central African nation the size of Western Europe with a population of about 68 million people, is the world’s poorest country with per capita gross domestic product of $349, according to IMF data. The United Nations Development Programme ranked Congo the least-developed country in the world last year and it remains near the bottom of Transparency International’s Corruption Perceptions Index.
Eurasian Natural Resources Corp., listed in London, became Comide’s biggest shareholder in 2010, when it purchased 50.5 percent of Camrose Resources Ltd. from Dan Gertler, an Israeli mining investor who still owns part of the project.
Mining began in November 2011 at the site, which has reserves of 10 million metric tons of copper at a grade of 1.77 percent, and total resources of 34.7 million tons of copper with an average grade of 2.02 percent copper and 0.23 percent cobalt, according to ENRC.
Mines Minister Martin Kabwelulu said the government had published all the information the IMF requested about the project and called its decision to halt the loan program “unconsidered.” The Comide deal resolved “old litigation” between Comide’s partners and the government had no part in it, he said in a mobile-phone text message today.
“It’s regrettable that this program was canceled in this manner,” Kabwelulu said.
The funds from the IMF loan were to be used to shore up Congo’s foreign-exchange reserves. Under the terms of its accord with the IMF, the government agreed to publish all contracts related to oil, mining and forestry to improve transparency in its revenue collection from those industries.
Request for Extension
According to the note on the sale published on the Mines Ministry’s website on Nov. 21, Gecamines undertook the Comide deal to resolve “a technical litigation,” the ministries said, without explaining the term. Straker didn’t pay Gecamines for the stake, according to the note.
Gecamines may receive 25 percent in another mining company, Goma Mining Sprl, in return for its shareholding in Comide. As part of the arrangement, Goma Mining took over part of a Comide mining permit as well, according to the note. Goma Mining already has another permit adjacent to Comide.
The note didn’t say who owns Straker International or Goma Mining. ENRC said Goma Mining wasn’t related to Comide, according to a statement e-mailed by the company’s external communications agency Nov. 29.
Melhado said Congo previously published more than 130 contracts under agreements with the IMF and World Bank. In May 2011, the government also signed a decree requiring that contracts for any cession, sale, or rental of the state’s natural resources to be made public within 60 days of their execution.
Congo had asked the IMF for a sixth-month extension to complete the program, which was set to expire Dec. 10, according to Melhado. The fund denied the request because of the problems with the Comide contract and because it wouldn’t provide enough time to reform Congo’s state-owned companies, he said.
“The extension for six months was not enough for all the reforms that we’d like to support the government to implement, particularly in the domain of reform of key public enterprises, and in particular Gecamines,” he said. “On the side of the IMF we are ready to re-engage immediately if we are requested by the DRC’s government.”
Gecamines’ sale to Straker came to light in May through a copy of Comide’s board minutes obtained by Bloomberg.
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