IMF Considering Congo Request to Extend Loan Program by 6 Months
The International Monetary Fund is considering a request by Democratic Republic of Congo to extend a three-year, $531 million loan program after the government published partial details of a controversial 2011 mining deal.
The lender, based in Washington, delayed loan payments to Congo since December 2011 after the Central African country failed to meet certain conditions of its agreement, including the publication of all mining contracts. Last week, under IMF pressure, the government issued a note describing the June 2011 sale of its stake in a copper mine run by Eurasian Natural Resources Corp. (ENRC), without publishing the contract itself.
“The IMF is currently assessing the sufficiency of the note to decide on the timing of a mission and the extension of the loan facility,” Oscar Melhado, the IMF resident representative in Congo, said in a phone interview today from Kinshasa, the capital.
Congo’s $14.8 billion economy has expanded since the end of nearly a decade of civil war in 2003 and is forecast to grow 8.2 percent next year compared with an estimated 7.2 percent this year, according to the IMF. The country produces about 4 percent of the world’s copper and nearly half its cobalt, and has deposits of gold, diamonds and tin.
While investment from global mining and commodity-trading companies like ENRC, Freeport-McMoRan Copper & Gold Inc. (FCX) and Glencore International Plc (GLEN) boosted copper production to more than 500,000 metric tons last year, Congo remains near the bottom of Transparency International’s Corruption Perceptions Index and the United Nations Development Programme ranked it the least-developed country in the world last year.
About $225 million in disbursements remain outstanding from the IMF program, which is set to end Dec. 10 if the extension isn’t granted, Melhado said. The funds from the IMF loan will be used to shore up Congo’s foreign-exchange reserves.
Congo has agreed to publish all contracts related to oil, mining and forestry as part of the loan agreement to improve transparency in its revenue collection from those industries.
According to the note from the mines and finance ministries, published on the Mines Ministry’s website on Nov. 21, state-owned copper miner Gecamines sold its 25 percent stake in ENRC’s Comide mining project on June 29, 2011, to British Virgin Islands-based Straker International Corp. The sale came to light in May through a copy of Comide’s board minutes obtained by Bloomberg.
The Comide deal was done 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 was not related to Comide, according to a statement e-mailed by ENRC’s external communications agency yesterday.
“While it’s good that Gecamines has responded publicly on the question of the sale to Straker, its response raises more questions than answers,” said Daniel Balint-Kurti, chief researcher on Congo for London-based advocacy group Global Witness, which has been campaigning for more oversight of Congo’s mining industry. “It is impossible to understand the interplay between all the obscure companies involved without knowing who they were beneficially owned by.”
ENRC, which is 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 34.65 million tons of copper with an average grade of 2.02 percent copper and 0.23 percent cobalt, ENRC said. The company has invested $130 million in the project, it said.
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