Jim Armitage: The boss of the DRC’s state-owned mining operation remains defiant despite uncomfortable questions over its controversial asset sales
For the man controlling the most powerful company in the vast and war-torn Democratic Republic of Congo, Albert Yuma is, on first impressions, a fairly unprepossessing chap.
Shortish and compact, he carries the typical air of the company president in a hurry. Frankly, far too busy to want to waste time talking to Western journalist-pests.
“I will give you 10 minutes,” was among his opening gambits as we found a sofa in a lobby of the stuffy and characterless Geneva Intercontinental.
One gets the sense that the chief executive of the DRC’s Gécamines state mining giant is not a man much used to being challenged. Running the state mining company in possibly the most mineral-rich country on earth presumably does not encourage a culture of healthy debate. Particularly when so much has to be done to turn the sprawling operation into anything approaching governance standards appealing to Western investors.
Gécamines was, at one time, so vast that it was considered to be a proxy for the Congolese state. In the days when the DRC was known as Zaire, it was the biggest mining company in the world. But years of war, corruption and bad management, coupled with the collapse of minerals prices, saw industries crumble to a fraction of their former selves. In its 1980s heyday, Gécamines produced 500,000 tonnes of copper a year – a figure that would boggle the pith-helmeted minds of Gécamines’ rapacious corporate ancestors Cecil Rhodes and King Leopold II of Belgium.
That 1980s production seems equally beyond belief now, after years of decline which saw the state forced to sell off big chunks of its assets, and operational control, to foreign mining firms. These sales were done on terms non-governmental organisations have argued left the Congolese people shortchanged and a wealthy few with fat profits: most notably among the latter the Israeli billionaire Dan Gertler, who has acted as an intermediary on a number of DRC asset sales. Mr Gertler argues that he helps bring in billions of dollars of investment and that the deal prices are reasonable.
Mr Yuma, an International Labour Organisation dignitary and chairman of the Congolese version of the CBI, was brought in by President Joseph Kabila three years ago to restore the near-bankrupt company to some of its former glory and put it on a business, rather than governmental, footing. The reduction in Gécamines’ might over the decades is remarkable – Mr Yuma says he will only float the company when production is up to 100,000 tonnes a year – a fifth of its 1980s capacity. What’s worse, he reckons it will take at least three years to get there.
Among Western governments and institutions such as the IMF, Gécamines has an unsavoury reputation. Since 2012, the IMF has frozen $225m (£134m) of loans to the DRC, due to the lack of details its government had supplied it to explain a Gécamines deal with Mr Gertler. NGOs and politicians in the West, most famously Kofi Annan’s Africa Progress Panel, repeatedly complain about the country’s corruption, and Gécamines’ opaque business methods.
Mr Yuma’s response to all this is as follows: “Seriously talking? I don’t care about the criticism from NGOs. The things we have done were good for the company at the time – a time when it is very difficult to raise money for investments.”
But what about Kofi Annan, I ask, don’t you care what he says about you? “Ha!” he erupts. “The Africa Progress Panel [report] was written by enemies of Dan Gertler. The panel – Kofi Annan – they just gave a signature without any serious investigation of the allegations of the NGOs.”
What about the IMF – are they just as clueless? “Every contract there was published,” he insists. “I have been to see the IMF. We have had three long days of meetings. Everything is clarified and there is no issue.” The IMF declined to comment, but there has been no renewal of the frozen loans so far, suggesting it begs to differ.
So, let’s talk in more detail about the criticisms from the NGOs. Where do they get their figures that claim things such as this: Mr Gertler was allowed to buy two state mining assets for $600m less than they were worth (claims he denies); that in some cases prices he paid are below valuations from analysts such as those at Deutsche Bank, Oriel Securities and Numis Securities; that he has served as a risk-free middleman in transactions such as one in which he earned a 500 per cent return in six months; that in the Mutanda project, he paid $120m for an identical-size stake to Glencore, which paid $340m plus $140m in assumed debt.
I don’t list them all, but Mr Yuma clearly has little time for such allegations. He says the NGOs such as Global Witness base all their cases on wrongheaded calculations. “They take the number of tonnes of reserves and multiply it by the market price. But that’s not the value of the mine! You have to invest in the plant, you have to process. The only value is net present value, and that’s it. That’s the big difference.”
The trouble with this argument, says Daniel Balint-Kurti at Global Witness, is this: “We do use net present value. And we use external valuations from the likes of Deutsche Bank, or we use, where we have to, equivalent sale prices of similar deals that have taken place.”
Mr Yuma adds that Gécamines is always open to NGOs seeking clarification on its numbers. But according to Mr Balint-Kurti, painful hours waiting fruitlessly for meetings with officials behind the high, copper doors of Gécamines’ head office in Lubumbashi tell a different story. It is notoriously difficult to get access to meaningful financial accounts to assess how Congo’s mining wealth is moving around, he says.
Mr Yuma tells me proudly that all the numbers anybody could wish for are available on its website. I couldn’t find them. And as for the PWC-audited annual accounts he promised to publish by the end of last month – no sign of those either. The company was unable to supply them as this article went to print.
Mr Yuma came into mining from textiles and other, possibly less controversial, industries. He has arguably the toughest private-sector job in Africa, trying to make Gécamines lead operator of the country’s mines, undoing the previous deals which saw it enter joint ventures that left the DRC a minority shareholder, with too little of the wealth remaining in the country. It has been tough, and he has made progress.
But the plan requires massive investment from abroad. And, it seems to me, Mr Yuma’s restructuring work goes hand in hand with improving relations with Western politicians, the IMF and the NGOs who help shape the public debate.
Only when the country’s reputation has improved will he convince Western investors, your and my pension funds, to help finance its recovery.
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