Gecamines, the Congolese state mining company, is planning an overhaul of its joint venture agreements to assert more influence over the management of its mining assets. Guy Robert Lukama, Gecamines chairman, announced the company's intention to appoint more local executives to boards governing joint ventures, aiming for a more substantial say in the operations.
This strategic move is part of Gecamines' efforts to rectify what it perceives as past mistakes in agreements that compromised its best assets to attract foreign investment. The initiative comes at a time when global demand for minerals critical to the green energy transition, such as cobalt and copper, is surging. The Democratic Republic of Congo, home to Gecamines, is the world's leading supplier of cobalt and ranks as the third-largest copper producer.
Amidst concerns that some existing agreements disproportionately favor foreign investors, particularly Chinese companies that have significantly contributed to the country's cobalt and copper output, the Congolese government has sought to renegotiate terms. President Felix Tshisekedi's administration has highlighted the need to address deals skewed in favor of China, resulting in state-backed firms having to secure an additional $1 billion under a revised infrastructure for minerals agreement.
Lukama emphasized the importance of board representation in ensuring accountability, transparency, and adherence to local procurement and training regulations. He criticized some mining operations for their lack of investment in expanding output, attributing it to prolonged indebtedness and insufficient oversight. Lukama's remarks reflect Gecamines' dissatisfaction with partners reporting losses and reducing production amid fluctuating cobalt prices, despite stable copper values.
In a notable agreement with China's CMOC Group last year, Gecamines secured rights to acquire a proportionate share of copper and cobalt produced from the Tenke Fungurume Mining operation, along with an $800 million settlement and $1.2 billion in dividends. This deal has spurred Gecamines to pursue trading opportunities in copper and cobalt with other partners, including Glencore and Zijin Mining.
Gecamines' call for a reevaluation of joint venture terms stems from concerns that investors are not fulfilling their obligations, particularly in community development. The 2018 changes to the Congolese mining code have strengthened Gecamines' position to demand contract reviews and increased state participation in mining projects.