JOHANNESBURG (miningweekly.com) – Democratic Republic of Congo (DRC) group Fleurette has responded to criticism directed at it on the Kamoto Copper Company (KCC) royalties issue.
The issue in question centres on the sale by DRC State mining company Gecamines of royalties from Katanga’s KCC project to a Fleurette-owned entity.
Dan Gertler's Fleurette states in a media release that international nongovernmental organisation Global Witness has either misunderstood or ignored the basic economics of the deal, which it says produced significant value for DRC State mining company Gecamines and a loss to Fleurette.
The company points out that $3-billion was paid in tax by the Mutanda and KCC assets and laments the failure to note that Gecamines had to use the royalty to cover a pre-existing debt, and also that the DRC government continues to be entitled to royalty payments for KCC and Mutanda.
Owing to Gecamines selling the royalty right before operations at KCC were suspended, Fleurette says that, in addition to the loss of the royalty deal, it lost $190-million on the sale of its equity stake in Katanga.
It explains that Gecamines gave directions to KCC to make the payments due to it direct to Africa Horizons Investment in partial payment of the historic loan.
Fleurette describes as disappointing the jumping to conclusions rather than accepting the demonstrable benefit to Gecamines and the DRC.
Diversified mining and marketing company Glencore last month bought the remaining 31% stake in Mutanda for $922-million and a further 10.25% stake in Katanga for $38-million from Fleurette, its former joint venture partner.
The all-cash transaction, net of loans, resulted in Glencore paying Fleurette $534-million in cash, after taking into account the settlement of outstanding loans payable by Fleurette to Glencore and shareholder loans owed to Fleurette by Mutanda, now operating at full capacity of more than 200 000 t of copper a year.
Gertler said at the time that with the mine operating at full capacity, it was opportune for Fleurette to exit its investment and to reinvest in further brown and greenfield opportunities in the DRC.