An essay by Barry Sergeant (bsergeant@boesec.co.za)
From one of the greatest novels - Joseph Conrad's "Heart of Darkness" to popular music - Warren Zevon's "Roland the Warrior" - the Congo has inspired man as no other country on the continent. Zevon almost captured the current situation: "In sixty-six and seven, they fought the Congo war, fingers on their triggers, knee-deep in gore."
Virtually unchanged since the 1960s is (now, the Democratic Republic of the) Congo's irresistible endowments: a quarter the size of continental America, and a gigantic river basin with a verdant tropical cover and untold mineral riches - copper, cobalt, diamonds, petroleum, gold, zinc, silver, manganese, and others.
What's new? The blatant, flagrant pursuit of filthy lucre by cross-border elites and mavericks. For 32 years, such pursuits had been the sole domain of President Mobutu Seso Seko. Set against the modern facade is the heaviest commitment, ever, of foreign private sector mining companies, to Congolese soil. Right now, such companies are sitting silently on the sidelines, aghast.
President Laurent Kabila, in power since May 1997, is fighting a desperate war. In August this year, the "Rebel Coalition" initiated its war against Kabila. Kabila reacted, with little money, and dispirited troops. Under the guise of international legitimacy, he successfully attracted support from Zimbabwe, Angola, Namibia, Sudan and Chad.
Two factors have become clear since the start of the war. First, Kabila will (or may) sign, or sanction, commercial deals without any regard to the rule of law. Second, the Rebel Coalition, which now controls a vast portion of the country - the "East" - is vastly superior to Kabila's "army" - in every sense.
The Rebel Coalition has two key characteristics: it is ethnically Tutsi (direct or indirect), and it has a will to win. Kabila's "army" has little, if any, will. But Kabila is in for the fight, and his "use by" date may be determined by how much cash he can raise. Since taking office, he has effectively nationalised Miba (turnover: US$325-million a year), the giant diamond mine near Mbuji-Mayi.
The state parastatal, Gecamines, has always controlled and owned most of the copper-cobalt operations around Lubumbashi, Congo's commercial heart, near the Zambian border. Since taking office, Kabila's government has granted mineral concessions to dozens of foreign companies.
Possibly the most heavily committed is Canadian-listed Tenke Mining, which owns 55% of the fabulous Tenke Fungurume copper-cobalt mine, near Lubumbashi. During 1997, Tenke Mining spent C$113m for acquisition of the concession; C$50m on the licence award; C$20m on evaluation, and other sundry expenses. Tenke Mining has agreed to pay C$50m to Gecamines following election to commence commercial production, and C$150m by May 2003. Such expenditures may be described as hallmarks of a bona fide intention.
Officials at Tenke Mining have made no comment since the start of the "new" war in August. Possibly the only foreign company that has issued a public statement is the company (and it may be the only one) which has suffered total nationalisation. During August, Canadian-listed Banro Resources reported that its 93%-owned Congolese subsidiary Sakima had effectively been nationalised, and its 25-year mining convention terminated.
The next day, following a complaint, officials in Kabila's office admitted "a grave error." It may have been no coincidence that Banro's concessions are located in Kivu province, where military authorities had renounced their allegiance to Kabila's government. This week, top Banro executives were in Kinshasa to discuss the US$1-billion lawsuit Banro has lodged against the DR Congo.
Foreign investors remain exasperated by explicable, but bizarre, business deals. Marketing of Gecamines' cobalt was signed over to Ridgepoint, partly owned by Billy Rautenbach, a colourful car dealer also involved in the transport business. And then Mr Rautenbach was named new chief executive of Gecamines, and head of a "recovery" committee for Gecamines. Ridgepoint has committed itself to provide Gecamines with the funds, staff and technical means to initiate a recovery process. Independent experts reckon Gecamines needs around US$1billion just to stand still.
There were signs of ad hoccism in Congo before the "new" war. In January 1998, Gecamines announced that the award of the Kolwezi tailings property to American Mineral Fields (AMF) (another Canadian company) had been summarily cancelled. Eventually, a new company, Congo Mineral Developments, emerged, with AMF a 50% stakeholder.
Bizarre allegations include a Zimbabwean army official negotiating an arms-for-Congolese-diamonds deal; Kabila planning to hand a stake in the Miba diamond mine to a company controlled by Namibian president Sam Nujoma's brother-in-law, and Angola's state oil company Sonangol winning exploration rights in Congo, and the right to distribute fuel in the Congo.
Kabila's demands for cash remain desperate. The Rebel Coalition is preparing to move on three fronts: north to take Gbadolite; west to take Mbuji-Mayi, and south to take Lubumbashi. The Rebel Coalition is exceptionally well organised, financially and militarily, and its vision extends far beyond the short-term. The Western countries have stayed out of the fray, describing Congo as "an African problem."
Foreign investors want in; but it is now clear that Kabila will have to go. In return for commitment of billions of dollars, skills and expertise, foreign investors just want a government that sticks to its word. Is that too much to expect? Meanwhile, Kabila appears to have subscribed to a line in Zevon's song, namely: "Send lawyers, guns and money. The shit has hit the fan." |
