Mining firm 'almost certainly' victim of corruption

By Alex Ritson
Business reporter, BBC World Service

Image caption, First Quantum has also had to leave its Frontier mine

The president of what was one of the biggest copper mining companies operating in the Democratic Republic of Congo (DRC) has said his firm was "almost certainly" the victim of corruption.

First Quantum Minerals of Canada was the single largest taxpayer in the DRC last year and a major employer. It had invested close to $1bn (£625m) in the country since 2001.

But relations with the government have soured, and its operations were repossessed. One of its biggest mines at Kolwezi has since been resold to a rival international mining company, ENRC.

The repossession followed a process in which the government of the DRC reviewed all mining contracts in the country to see if they were fair. Many had been signed during what is sometimes described as Africa's "World War" between 1998 and 2003.

'Transparent negotiations'

But First Quantum insists its operations were set up a year later.

Image caption, Mr Newall says the company did not expect any problems with its Kolwezi contract

"Our contract at Kolwezi was openly and transparently negotiated and was measured for fairness by the World Bank who entered the project as a partner through the International Finance Corporation," says the company's president Clive Newall.

"A review of all mining contracts since the democratically-elected government of Joseph Kabila had our full support. We were expecting to have our agreement signed off by the government because it was a recently negotiated agreement, under the current mining law, signed by this president.

"Subsequently, of course [our facilities] were transferred to a company which is controlled by a gentleman who is quite close to senior members of the government."

When asked by the BBC if this amounted to corruption, Mr Newall replied, "Almost certainly."

Image caption, The Kolwezi facilities have been transferred to another company

That accusation of corruption is flatly rejected by the government of the DRC.

"We know that song from everybody who has a problem with our rules and laws of this country," says the Minister of Information and government spokesman, Lambert Mende Omalanga.

"They are trying to discredit our leadership by saying we are corrupted. The World Bank is not God. It is not the owner of this country.

"We are the ones in charge. We were elected by the people of this country to care for the interests of this country, and we make the laws and the rules, not the World Bank."

Social projects

The dispute led to the government also withdrawing First Quantum's permits for another of its mines in the DRC, the Frontier facility, which now lies abandoned.

Thousands of people have lost their jobs and the mining equipment is falling into disrepair.

Clive Newall says he is trying to continue the social programmes that were attached to the mine, but even this is difficult.

"We were building schools and clinics and roads and all manner of social projects," he says. "We are continuing to sustain the schools and the clinics as far as we can, but we're not allowed in the country, which makes it quite difficult.

"But there's no indication of anybody else stepping up to the plate to take over what we did," he goes on. "It's tragic for the people of the DRC.

"The DRC has fabulous natural resources, which if they were developed would make that country certainly one of the richest, if not the richest in Africa.

Image caption, First Quantum was also funding many social programmes in the DRC

"It's going to take a long time to overcome the damage that has been done to the investment environment."

That sounds like a warning to other would-be investors in the DRC to think very carefully before committing money to the country.

But there's no doubt that there is plenty of money to be made. The DRC is similar in size to the whole of western Europe and has some of the richest mineral reserves in the world.

"We have more than 200 foreign companies waiting here to conclude contracts with us. First Quantum is only one company," says Lambert Mende Omalanga.

"Our message is very clear - we are open to investors. We are badly in need of them.

"But we are telling them come here and respect the laws and rules of this country - and respect the interests of this country."

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