Gecamines, a Congolese firm revealed it has signed a production-sharing deal for copper and cobalt deposits with HongKong Excellen Mining, which will pay a $40 million signing bonus.
Democratic Republic of Congo, remains one of the world’s poorest countries despite the country being Africa’s top copper producer and the leading miner of cobalt. Congo’s state mining company said the production-sharing deal by Gecamines would guarantee it a “significant” share of annual production from processing facilities in the southeastern town of Kolwezi.
Gecamines revealed that its joint venture with international miners like Glencore and China Molybdenum do not bring enough money into state coffers and is turning instead to production-sharing agreements, an initiative common in the oil sector.
Stephane Cormier, Gecamine’s economic adviser said “production sharing agreements align the interests of the two partners because the risk now weighs more on the investor than on Gecamines”.
Gecamines Chairman, Albert Yuma also noted that a $40 million installment of Hong Kong Excellen’s signing bonus would be paid by the end of the year.
Gecamines has fallen heavily into debt and produced less than 16,000 tonnes in 2017. This is far from the company’s remarkable achievement in the 1980s, when it produced close to 500,000 tonnes of copper a year.