Christophe Asselineau is an attorney with Simmons & Simmons’ Global Mining Group. In the following interview, he explains the state of the mining industry in the Democratic Republic of the Congo (DRC) and makes the case for the France and Europe’s need to become involved in the process without further delay.

Remarks collected by Dominique Flaux

Les Afriques: What is your involvement with the DRC’s mining industry? Christophe Asselineau: I advise mining companies, banks and investment funds already present in the RDC or who wish to invest there. I’ve been working in this country for around 20 years. In the course of this time, I have therefore had the opportunity to work on a number of cases ranging from obtaining titles and dealing with contentious international disputes to concluding partnerships and handling project financing.

LA: What proportion of mining contracts has been or will be “revisited” in the DRC? And how is this process going? CA: The Commission was created in April 2007 and reviewed 63 contracts that accounted for the majority of them. These were contracts signed in 1996, concluded between the State, public or semi-public companies and private operators. All the contracts were supposed to be reviewed but some were not examined. So, I had a few clients who evaded the process and are still wondering today how this miraculously came about. The Commission finished and published its report on the 20th March. The government informed the mining companies of the Commission’s critiques and the government’s requirements. It invited them to respond, which they did.

There is a myth that suggests that all of these contracts were signed hastily with AK47s shooting left and right and suitcases of cash lying about. While this version of the events is entertaining, it is exaggerated at best and would only occur in highly contentious situations. 

LA: Who decides when contracts are to be reviewed and how is it done? CA: One of the main things for which the Commission is criticised is its lack of transparency. In fact, it’s a criticism made even by the Carter Center, an American NGO that, despite its lack of experience and credentials in this area, has always supported the need for this “review” process. Evidently, members of the Commission did an immense amount of reading. However, only too often, the process led to conclusions that had neither legal nor economic standing – all reduced to a fundamental requirement: “This transaction is not ‘balanced’, give more moneys to the Gecamines and increase the Congolese share in partnerships.” These demands are exacerbated by the current rates going for metals but they do not take into account the enormous costs involved with developing mining deposits. In all partnerships, these costs are borne by the international investors who, often, must also finance the portions of the Gecamines as well as those of the State. The Commission is also unaware of the fact that, and I can testify to this, some of these partnerships are the fruit of extremely lengthy talks during which Gecamines and the State negotiated, while fully aware of the issues at hand and with a lot of bitter sentiments, the extent of their participation and their share of the profits. There is a myth that suggests that all of these contracts were signed under duress with AK47s shooting left and right and suitcases of cash lying about. While this version of the events is entertaining, it is exaggerated at best and would only occur in highly contentious situations. The risk that the DRC faces is that, if the review process results in expropriations as the Commission’s report leads us to expect, even if only a few key players were directly impacted, the country will face a flood of litigious claims from the international community – an outcome that will stop the mining industry’s development dead in its tracks as few serious companies fresh off the boat, whatever their country of origin, will be willing to invest the necessary amounts in the development of entities facing arbitration. For the DRC and Gecamines, that will mean being hit with considerable claims in damages and the loss of substantial amounts of revenue that these entities would have to pay.

LA: Does anyone know the ratios between informal or illegal and legal mining in the DRC’s mining sector? CA: Informal mining increased with the decline of the Gecamines and the increase in prices. It is, however, it is very difficult to give reliable statistics as they vary from one metal to the next. But any functioning industrial mining venture has a production capacity that far exceeds that of thousands of individual, illegal mines. Informal mining production, which is not necessarily illegal, is without a doubt higher in coltan or diamonds than in copper. We’ve been hearing lots of figures but none is reliable. The pillage of the DRC is a popular theme among uninspired politicians and NGOs. Therefore, during the last General Assembly of mines held from the 12th to the 17th of March this year, some claimed that 90% of exports were allegedly illegal, but without providing the source of their data. Furthermore, these same people were recommending that foreign mining companies be expelled so that the industry would belong solely to small-scale , informal miners. Apart from the economic absurdity of remarks like that and the disaster such a move would mean for the DRC, anyone who has been to the informal mining venues can attest to the alarming conditions their miners must endure, workers who are often quite young and fall victim to accidental death.

The problem for a potential author of a coup d’état who might be unhappy with China’s closer relations with the government of the DRC is the fact that the current president was elected under the watch of the United Nations.

LA: What is China’s current share of the DRC’s mining industry? And which countries are negatively affected by its increasing involvement? CA: Remember that China entered mining in the DRC ten years ago when it established Gecamines partnerships. Currently, Chinese activities remain relatively modest. Things could however change with the agreement recently signed between China and the DRC. Essentially, this deal would amount to a kind of exchange of “ore for infrastructure”. What is paradoxical about this affair is that this agreement doesn’t appear to conform to the new mining code that the State introduced as the solution to the ad hoc tax exemptions of the past. In addition, the latter are also to be addressed during the review process. This agreement therefore runs the risk of marking a step backwards but could appear to be a short-term lucrative fix for the government – particularly if this infrastructure is rapidly visible by the local population. However, even the implementation of this project could prove difficult as, on the ground, Chinese businesses seem to import all of their labour – a trend that strains relations with the local population. In light of these developments, it is really a shame that Europeans, and particularly the French who have powerful construction and energy companies, speak the language of the people and are accustomed to working in Africa hiring locals, did not offer an exchange similar to that of the Chinese. Really, that would have been a great way to change France’s image in Africa by, for example, pairing our industrial skills in infrastructure, both of our main mining companies, European capital markets and Western and African miners or industrial entities. The European Commission just launched a consulting project on the securing and provisioning of ores. No doubt it would be wise to pursue this further but one must apply this voluntary policy as soon as possible. Incidentally, in so doing, one would also realise one of the recommendations of the Attali Commission – something much more meaningful than taxi reform and it would be done more easily too!

LA: Several observers fear an imminent danger of destabilising the government in power and even the risk of harm to President Kabila himself resulting from these closer ties between the DRC and China. What do you think about this? CA: Indeed, I have been hearing these rumours but I have no idea if it’s linked to the Chinese at all. The problem for a potential author of a coup d’état who might be unhappy with China’s closer relations with the government of the DRC is the fact that the current president was elected under the watch of the United Nations. The new leader would therefore need to have a highly “convincing” argument to justify overthrowing the government. Perhaps by posturing as “the one who saved the DRC from the Chinese dragon” he would attract some support in his own country, at least in Katanga. With a greater degree of cynicism, he might also garner the unofficial approval of certain European capitals. But maybe he would opt to await the first visible faux pas of the president in power before doing anything at all. Yet, Joseph Kabila seldom takes risks.

 In light of these developments, it is really a shame that Europeans, and particularly the French who have powerful construction and energy companies […] did not offer an exchange similar to that of the Chinese.

LA: The IMF has been putting a lot of pressure on the DRC to get its public spending under control. Can it achieve this in the current context in which it finds itself, particularly in the East? CA: The situation in the East remains quite serious. You need only chat with some of the officers of the United Nations Mission in the Democratic Republic of Congo to understand their frustration with the inefficiency of the UN. That being said, I doubt that this conflict is the main source of the DRC’s problems with the IMF. The anarchic management style of all the centres of public finance is the likely reason. The DRC was supposed to demonstrate, before February 2008, its ability to correctly manage its finances. At the heart of this was the signing of a 3rd new structural adjustment programme within the framework of the debt removal initiative intended for the poorest indebted countries. The IMF has given an extension until 31st March to meet its objectives. In this context, the proposed deal with the Chinese would significantly increase the country’s national debt, thus acting in complete opposition to the objectives of the IMF. What is the DRC’s response to this? Not illogical in its substance, the government of the DRC states that the Chinese government is prepared to provide vital infrastructure immediately and this without conditions. It would therefore be in the interest of European institutions, in conjunction with the IMF, to be creative and fast in responding to this need. As the French will soon chair both of these institutions, this is certainly a singular opportunity to develop and rapidly implement daring policies that would connect private companies and public aid entities in an effort that would be mutually beneficial to both Europe and the DRC.