Jesuit discusses moves to renegotiate mining contracts in Congo

By Mary Durran
Catholic News Service

KINSHASA, Congo (CNS) -- A Congolese Jesuit said he is optimistic that 60 government contracts with international mining companies will be renegotiated in favor of the government, raising more revenue for one of the poorest countries in Africa.

"Mining companies have already accepted to renegotiate the contracts in 57 out of the 60 that were revised," said Jesuit Father Ferdinand Muhigirwa, director of the Center for Studies for Social Action. "I am optimistic that the government will come to some agreement over the remaining three contracts."

In 2007 the government appointed a commission under the Ministry of Mines to review 60 mining contracts signed between the state and international mining companies from 1996 to 2006, a politically unstable period before President Joseph Kabila was elected in 2006.

The commission also was charged with following up on the work of a U.N. panel, which found in 2000 that many mining companies had paid bribes to government officials and local strongmen to obtain lucrative mining concessions. The panel said there was a link between mining activity and the armed conflict that has persisted in certain regions of the country.

The government commission, which called for more "justice and ethics in business," concluded that 29 of the 60 contracts should be renegotiated to ensure a fairer share for the government and that 31 should be eliminated and drawn up again on new terms. Of the 60, none was determined by the commission to have offered satisfactory terms for the Congolese government.

For example, Father Muhigirwa told Catholic News Service recently, the original contract between Freeport McMoRan Copper and Gold "and the government over the Tenke Fungurume copper mine, worth some US$20 billion over the next several years, set out that the company got 83 percent of the profits and the state only 17 percent."

The Tenke Fungurume project represents one of the world's largest supplies of copper, with an annual output of 40,000 tons.

In 2002, a new mining code stipulated that 55 percent was to be allocated to the company and 45 percent to the government. The commission is proposing that 51 percent of profits go to the Congolese government and 49 percent to the company concerned.

"Such revenues over the long term would make a huge difference for the Congolese state and raise revenues for development," Father Muhigirwa said.

Congo has some of the world's richest mineral resources but its people are extremely poor. Renewed violence in eastern Congo has displaced a quarter-million people.

"In 2007 revenues from mining amounted to US$25 million to the state," Father Muhigirwa said. "However, the World Bank has shown that just with the new terms of these 60 contracts mining can generate at least US$184 million annually for the state."

Although some companies have shown reluctance to renegotiate contracts, the Jesuit priest said he believes that the investments they have made are so important that they will ultimately prefer to renegotiate.

"If they refuse to renegotiate, then we believe that the government will just not renew" their contracts, said Father Muhigirwa.

The lucrative Tenke Fungurume contract will expire in 2026; Father Muhigirwa said that if Freeport McMoRan refuses to renegotiate, then they will have to leave Congo.

"I do not believe they will do that because there is too much at stake," the priest said.

Some observers have said that, even if companies pay a higher percentage of the profits from mining to the government, there is so much corruption in Congo that the poor will not profit anyway.

But Father Muhigirwa said he is optimistic that things can change.

Nine ministries are involved in the work to review the mining contracts, and the Center for Studies for Social Action has worked to keep Congolese lawmakers informed about the process.

A government bank account recently has been set up to receive revenues from mining. Funding used to be paid into different accounts and could be kept hidden.

"It would now be very difficult for a few individuals ... to pocket any of the mining revenues because the whole government and a wide range of civil society organizations are aware of the monies that will be generated," he said.

Congo also has signed on to the Extractive Industries Transparency Initiative, launched by former British Prime Minister Tony Blair in 2002. The initiative requires all revenues and payments by mining companies to be made public.

"Up until now no one knew what mining companies were producing or the revenues they were generating. But now, they will have to reveal everything that they produce," said Father Muhigirwa.

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CONGO-MINING Jan-2-2009 (770 words) xxxi