Sea of  Copper

Report / Aug. 6, 2020

The Deal for Deziwa

Mega deal between Gécamines and Chinese state-owned company CNMC for one of DRC’s flagship copper mines could be leaving the country short-changed

An $800 million deal for one of Democratic Republic of Congo’s (DRC) flagship copper mines risks leaving the country short-changed, a new Global Witness investigation reveals. In violation of DRC’s mining law, key details of the mega deal signed between DRC’s state-owned miner, Gécamines, and the China Nonferrous Metal Mining Group (CNMC) remain unpublished. Meanwhile, the scant information that is available raises more questions than answers about the financial value of the project for DRC, our analysis has found.

A questionable deal

CNMC, a large Chinese state owned enterprise, and Gécamines struck a deal for the potentially huge Deziwa copper and cobalt mine in DRC’s southern Copperbelt in 2015, part of an even larger $2 billion accord for five different projects. Global Witness’s analysis of CNMC’s Deziwa deal with Gécamines casts serious doubt over the fairness of this contract for DRC. Including a signature bonus to Gécamines for Deziwa that may turn out to be worth just 50 percent of the headline figure promised to the company in the contract.

Global Witness has also uncovered information about a fixer, Siu Kam Ng, who gave a media interview in 2016 which he claimed to have made suspect payments to DRC officials to ease CNMC’s path into the country’s mining sector some years ago. Our investigation shows how this fixer, though not involved in the Deziwa deal, currently owns a significant stake in CNMC’s DRC-based mining businesses, raising questions about the company’s activities in the country.

The only publicly available contract for the Deziwa project, analysed by Global Witness, is in fact only a covering document that sets out the basic parameters of the deal. The full details are contained in a series of subcontracts and amendments that have been kept secret, despite DRC’s legal obligation to publish them under the country’s mining laws.

A crucial partnership

The Deziwa mine went into production in January 2020, around the same time CNMC opened a vast copper smelter in Lualaba province. Since 2012, CNMC has acquired rights across DRC’s copper and cobalt seams. The scale of these acquisitions and new operations have catapulted CNMC into the upper echelons of DRC copper producers.

CNMC’s collaboration with Gécamines is central to its success in DRC and has helped make CNMC a major player in the country’s copper sector. This report draws together, for the first time, details of the partnership between the two companies.

Download the full report here (PDF, 4.96MB)

Copper is a key component in many of the renewable technologies that can help tackle the climate crisis, as is the cobalt extracted as a by-product of copper mining. Both could be central to a sustainable and more equitable future, if managed responsibly. Given the global drop in commodity prices and pandemic-related disruption to mining operations in the country, the transparent and responsible management of the sector is more crucial than ever.

Recommendations

Global Witness is calling on Gécamines to follow Congolese law and publish all of the contracts for its deals with CNMC, including the financial models and projections for the Deziwa project.

We are calling on CNMC to review all of its investments in DRC, to make sure they comply with the Congolese mineral laws and ask its local partner Gécamines to publish all of the contracts it has signed with CNMC.

CNMC should also ensure that its investments in DRC are in line with the principles set out by the China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters (CCCMC) in its Guidelines for Social Responsibility in Outbound Mining Investments, although it appears that the company is not a member, nor is it required to be. Finally, CNMC should also clarify its relationships with brokers and middlemen in DRC and produce detailed information on the source of all of its copper and cobalt. 

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Jean-Luc Blakey, Senior Campaigner

[email protected]