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Democratic Republic of CONGO - INTERVIEW 
Interview with Mr. NZENGA KONGOLO
CEO of GECAMINES (Générale des Carrières et des Mines)

Summit Communications: Could you share with us the path which led you to the post of Managing Director of GECAMINES?

Mr. NZENGA KONGOLO: On 11th September 2002, I became the Managing Director of GECAMINES. I am a civil mining engineer, a holder of a master of sciences and two specialized diplomas in mining. I got one in Belgium and the other one from the University of Lumumbashi. This enabled me to be in contact with the mining industry in general and GECAMINES in particular. When I was a student, I had training courses with GECAMINES before I started working with the University. Later on, I applied for a post with GECAMINES and I was recruited for a period of two years. Normally after that period, I could have continued my studies abroad but I remained with GECAMINES. The company accepted to finance my post-university studies. Like many other people, I was recruited as engineer undergoing training. I started my career from the lowest level of supervisor before being foreman, then engineer. Then I was posted to the production department after a training and got promotion to the post of divisional in charge of production, headquarter director of one of our three mining groups of Kolwezi before I was appointed Managing Director in Lumumbashi, the capital of the province of Katanga.

Summit Communications: People usually refer to Congo as a geological scandal. Could you present to us the cartography of GECAMINES here in Congo?

Mr. NZENGA KONGOLO: It is true that Congo is a mining scandal. Our ancestors who lived in this very region were already working copper before the arrival of the colonists. Before the Berlin conference of 1885, people were already talking about the geological scandal and the international community was already lusting after that region.
Then, the resources of Congo caused much ink to flow and the matter was tabled during the negotiations preceding the independence. Towards the end of the Second Republic, after the departure of Mobutu, the natural resources of Congo such as copper, diamond, coltan, gold and heterogenite were the subject of many desires and anarchical exploitation by boarder countries which were involved in the war for political reasons as well as for economic reasons. But despite all those years of crisis, the resources and the potential are still present. A well managed and planned exploitation will enable to contribute to the sustainable development of our country and to the poverty reduction.
When you look at the mineral map of Congo in general and the map of the southern part of Katanga in particular you can see that the reserves in copper and colbat are impressive in quantity: we estimate that it is possible to continue the exploitation of copper during the next 50 years with certitude and probably in the next 75 years, indeed 100 years. In fact, so far, we have concentrated our efforts on the exploitation of superficial deposits, but the subsoil remains unexploited and the potential remains intact, for lack of survey and exploitation campaign. Thus, for the moment, what we have at our disposal are only superficial indications carried out by foreign companies in the past.

Summit Communications: Some years ago, the activities of GECAMINES were flourishing both at the national and international level. Today, what are the main activities of GECAMINES, and in which sectors are they concentrated?

Mr. NZENGA KONGOLO: We have two concessions of the GECAMINES: the concession of copper and the concession of tin. The concession of copper is situated between Kipushi and Kolwezi (300 km) where there are other metals such as gold and germanium. In the North, we have the concession of tin that represents about 32.000 km² against 19.000 km² for the concession of copper. We should note that these figures date from the time before the dislocation in partnership. If you put together the reserves known for sure on the one hand, and the probable reserves on the other hand, the global estimations in copper metal contained in the concessions are estimated at (figures to be confirmed) 4 millions of cobalt. This estimation can even be multiplied by 2 if we undertake to reinforce our technical means for exploitation. That remains our weak point for the moment. Parallel to this, we estimate the reserves of zinc at 6.5 millions, those of germanium at more than 3 millions tons without counting the deposits of polyhetal.

Summit Communications: In terms of world production, what is the part that the production and the reserves of Congo represent now on the whole international market?

Mr. NZENGA KONGOLO: GECAMINES has reached a level of annual production during the second republic of about 478.000 tons of copper and 17.000 tons of cobalt. At that period, GECAMINES was the 5th world producer of copper and the first producer after us had nearly 5.000 tons of cobalt in the 1980s.

Summit Communications: The production policy is a very important policy when we know the ups and downs of the company. As people know the importance of the mining sector in the economic boosting and the monetary stability of the country, what is the management policy of GECAMINES in such a context?

Mr. NZENGA KONGOLO: GECAMINES for a long time remained the mining leader in our country. On this account, we can emphasize that at the time of late President Mobutu, GECAMINES produced more than during the time of Union Minière du Haut Katanga. We must recognize that eventually, that production was not rationally used to develop the mining industry: we know the events of the second republic, the management problems of state companies, and the lack of perceptiveness of the authorities of that time.
In the 80s, GECAMINES had put in place a programme to increase its production from 600 to 800.000 tons per year in order to produce 1 million tons in the region. Unfortunately, it was at the moment that we started having problems of management that increased in 1991 when an embargo was put on the country. After that year, the figures that were already falling well before 1991 did not permit to gather foreign capitals necessary for development.
In fact, in the past, it was possible to borrow between 400 and 500.000 dollars a year, due to our turnover around 1.2 and 1.3 billion dollars per year in average. At that time, we had the potential to borrow a financial resource that disappeared with time, the political events, the end of the international community's support etc…
An embargo was put on the country, all the expansion projects were cut, they had put and end to all the projects. Let's take for example, the case of Kolwezi a big project such as the one of P2, a refining project that had already had problems during the first war of Shaba in 1968. GECAMINES swallowed a sum of 140 million dollars without producing anything. Similarly, in Kove III, GECAMINES invested 135 million dollars that served to achieve part of the work, then, for lack of means, the technicians who were left there. Today, those projects are "white elephants". Unfortunately there exist other similar projects in which money has been spent in a thoughtless manner. At the time being, financiers continues to put pressure on GECAMINES to pay back all those debts… but we asked the government to accept to pay some of the debts because we are a state company and that the main reason of our decline is linked with the badly structured politico-economic context of the 2nd republic (cf embargo) where there exist problems at all the levels: at the level of the country, of political authorities and even here within GECAMINES.

Summit Communications: Since 2002 you have many restructurations coupled with a new dimension and redynamisation that permit you to have rather more positive prospect than some years ago even though the distance to cover remains very long. You still have a sick company and at the same time a company with an enormous potential. Today, what are the different orientations that you have put in place in order to bring GECAMINES onto an even keel?

Mr. NZENGA: An embargo was put on the country from 1995. From that time, GECAMINES took the option to turn to the private sector since the Congolese state was no longer able to give the necessary guarantees for loans. GECAMINES was confronted with serious crisis during which it became very difficult to have financing, the country being considered as high risk country.
In order to bypass the problem, we turned to private individuals. We have started a project with private mining operators, firstly with the G. FORREST company on the Kasombo project. Then other projects such as GTE came on, with the participation of an NGO (55%), FORREST GROUP (25%) and GECAMINES (20%). These projects work and are profitable.
Then we have continued with other projects such as TENKE FUNGURUME. It is a very big deposit situated at 60 Kms from Likasi. This year, if the project had started according to the schedule, we would have been in the 10th year of exploitation with in theory for the 11th year, a production capacity of 400.000 tons of metal copper, exactly what GECAMINES was producing. It is a crucial project for the sector, which, following the political situation was stopped for case of absolute necessity, but the current negotiations should permit to launch the project.
Another important partnership is the one of BHP and First Deutsch but he people of BHP have left, the ones of first Deutsch are still there. They have practically raised the option of entering into the partnership through WINDING, our partner.
Another project is KMT (Kingamyambo Musonoi Tailings SRL), processing the tailings from our old metallurgic factories in the Kolwezi concentrator accumulated over the years.
We are negotiating with the group American Mineral Field that has today become ADASTRA in order to develop those tailings. It is a project of about 330 millions dollars. We are presently at the phase of feasibility study. If the schedule is respected, the project is expected to start producing as from 2007, and a modern factory is expected to process the tailings.
There are other projects in progress with FORREST on Kamoto site and other projects again with the group GEC that bring together two companies namely DGI and BHD BATMAN. They are Jewish companies and they weight about 250 or 300 million dollars.
Parallel to this and regrettably, war has driven back the investors who have been replaced by small contractors who are for many of them apprentices and amateurs of the mining sector. But welcoming these investors was a condition of survival, an embargo being put on the country and because it had to defend itself, it was essential to keep the activity well and to prepare the relaunching of the mining activity.
In fact, the sector is the engine for development and despite the difficult years, we must emphasize that we still have mineral resources because in the other case, it would be a catastrophe!
The geological scandal described before 1885, exposed at the time of independence, used as a political weapon when President Mobutu was chased from power and that people continue to talk about at the time of transition - the geological scandal - is still permanent. The reserves are there and when you cut across the country you notice that it is practically virgin and intact. The country is still to be discovered.

Summit Communications: In order to enable the investors to carry out prospection and production work, the government has adopted a mining code in 2002 what are its main assets and how do you perceive it?

Mr. NZENGA KONGOLO: We needed a regulation. The practices in the sector during the second republic before the publication of that mining code were deplorable for the country. People wanted to make of each project a prototype. Each project was negotiated in Kinshasa. They had to negotiate the customs regime and the fiscal regime individually. Most projects were exempted from taxes and it was a motivation for the investor to come but parallel to this, there were major disturbances at the macroeconomic level. This did not enable the start of many projects although they benefited from many advantages. With the implementation of the mining code, the investors had had the choice to remain under the regime of mining convention prior to the mining code or to submit to the new code in its entirety.
On the other hand, all the other new projects made public after the publication of the new mining code should automatically be submitted to the regime of the new mining code.
As far as I am concerned, I think that the new mining code is a good document which benefited from the contribution of international financial institution and multinationals. That code must be implemented in a systematic and unique manner that is, it must be the same for everyone without any distinction as we know that mining activities must generate incomes for the state, this in order to enable private companies to pay their taxes and the state to stop tapping public companies that have problems. The state must live with its incomes and the assets that belong to the state in the spirit of the mining code and according to the technico- economic model, between 35 and 45 % of the state's income should come from taxes and dues.
Thus, after the launching of a new project, the custom regime and the fiscal regime as defined in the new mining code should enable the state to have incomes - to the difference of the old regime that granted exemption over more than 10 years. The code also enables the state to play its role of regulator. This implies that the state has a certain organisation to live on taxes as everywhere the world over. The state must organize to collect its dues instead of leaving those dues to other people.

Summit Communications: Among all these new projects, which one belongs to GECAMINES, what is the role of the company in partnerships? What is the mode of functioning adapted?

Mr. NZENGA KONGOLO: GECAMINES does not bring what it could bring, that is the deposits. Talking about partners, the obligations concern feasibility studies, to present them to the company, to organize the financing in order to launch the project. That is why GECAMINES goes to the private sector. It is the only way to finance its project. In fact, they easily lend money to private individuals than to a state company.
Concerning the capital invested by the state, it boils down to deposits. The commercial terms that are negotiated during partnerships are not part of the new mining code. They enter into the commercial law and do not belong to the mining code. The state takes 5% for the new projects. This is the case with the Adastra Project of KMT for the reprocessing of tailings. It is a project that we have finalized in the new mining titles concerning the stocks of tailings.
In the other projects such as TENKE FUNGURUME, the mining title did not exist. They didn't have to apply for a new mining title and there was no reason to give 5% to the state.

Summit Communications: How do you succeed in managing accountancy between the commitments taken before and the new regulations of the mining code?

Mr. NZENGA KONGOLO: In order to give you an idea, there are companies which existed before with which we had signed contracts, and their participation amounted to 55%, while 45% was for the GECAMINES. There were other conditions. They had to pay 250 million of dollars. Some companies paid in advance 50 million dollars when Laurent Désiré Kabila came to power but after the starting of the war, the majority was unable to continue. For other companies, there are small informal negotiations for example between WINDING and GECAMINES that are going on while waiting for peace to come back to the country. Then with peace, the new mining code came out. WINDING came back with one of its partners and the contract was negotiated again. The difficulty of arrangements is in a hybrid hypothetical contract that becomes difficult to manage.

Summit Communications: When we go through Katanga, we can notice that GECAMINES is a paternalistic-shaped company: social infrastructures were built, like health centres, schools, sports centre, etc… All the activities that were undertaken in the past, and which still continue today, consist more in a duty or a necessity?

Mr. NZENGA KONGOLO: From the outset, it was at the same time a duty and a necessity. At the beginning of industrial exploitation in 1911, during the construction of the oven, Lumumbashi was in the bush. They had to construct railways lines. People lived in the bush. It was necessary to convince them so that they become interested in working with a direct compensation within the population. Put aside the industrial development, social development was necessary, given the level of underdevelopment of the population. It was not possible to start industrial exploitation in an area where there was no school. GECAMINES, under Union Minière, opted for the construction of schools and that is how they constructed a thousand schools in order to guarantee the education of children while preparing the relief at the level of the society.
It was also the case with the hospital and the canteen because it was a bush and we had to take care of workers, to train villagers and feed the miners. At that time, nobody went to the butcher's to buy meat At that time, nobody went to the butcher's to buy meat. Bread was brought either to the office or people had rations at the end of each month. It was also the case with medical care. Each worker of GECAMINES had a monthly set of medicines. Medicine was distributed without any limitations: some expired in the drawers; some colleagues gave them to friends while other sent them to their families in the villages.
Another example: if your car had a problem of plugs, there was a system of voucher to get plugs, as well as fuel. GECAMINES did everything and was making the region and the state survive. It is regrettable that they did not seize the opportunity to develop other industries.
Now with the fall of the production of GECAMINES at less than 10% of its capacity, all those sectors related to mining industry stopped: subsidies for medical care, studies for children, agricultural production, sports centres. GECAMINES does no longer have the means to maintain all those services.
We must also add that at the time of Zaïrianisation, the state imposed that we should take charge of activities that had nothing to do with our activity for example the management of Sendwe hospital, the biggest state hospital of the province. And that example is an isolated one, unfortunately.
Everything centred around GECAMINES. It was a system in which they wanted to put everything at the disposal of the worker so that he should produce a maximum output. But the consequence was that it did not give the worker the chance to prosper within another context. In fact, workers were taken charge of fully, from recruitment to after death. He was buried with the coffin of GECAMINES and his children continued to benefit from the advantages of the company. It is a system that could be condemned but it has to be replaced within its context.

Summit Communications: One can say that the system has had its days and the company must face other constraints if it wants to remain in the economic sphere of the country. In your opinion, what would be the model of economic development for the society, given the economic constraints?

Mr. NZENGA KONGOLO: Today, it is a question of opening the door to the private sector and the Congolese state must give the option because there is no other possibility. If the state finally decides for privatization, the authorized capital will be open to private individual. The regulation framework will be determined. People must know that despite the importance of installations, they have not been maintained over more than 15 years. There exist another failure on the side of the state because there exist no law on privatization. We have started the system of public-private partnership but the legal framework is still inadequate. To say it simply, we need many GECAMINES. Like TENKE FUNGURUME which, if it had started, would be at its 11th year of production and could have produced the same quantity as GECAMINES of the past. That is the sketch that we had in the public-private partnership.
Another option would be privatization but it is necessary to define the framework while knowing that the production model will be quite different from the one of a state company: private individuals come to gain money not to develop the country and create job opportunities. Unfortunately, that is what people believe. Private individuals need labour force to produce but if they can reduce that labour force, they will not hesitate to do it. If they can mechanize or automate, they will not hesitate either. The duty of private individuals is not to construct roads or schools. Our government must stabilize the political and micro-economical environment. Government must open the capitals to private partners. Companies that come must bring technology. They must start training programmes again. Without this, there will be a true problem of qualified labour force. Today, all the companies which start use GECAMINES Labour force. But this will not last.

Summit Communications: What is the form of financing that you would like to develop and what is the sum required for GECAMINES project to start?

Mr. NZENGA KONGOLO: Each project is a financing project. Today, we have 4 important projects: DCP with GEC, KTC with FORREST, KMT with ADASTRA, TENKE FUNGURUME. Each of them has important amounts.
At GECAMINES, we have a small project to push to 250.000 tons but we must gather 270 million dollars because today, with the present installations, we can get back 60% of copper and between 25 and 30% of cobalt whereas with the new technology, people succeed in producing more than 80% of copper and more than 75% of cobalt.

Summit Communications: Who are the clients you would like to develop your collaboration with?

Mr. NZENGA KONGOLO: As you know, we have no preference. We follow the level of development of countries. In the past, the biggest part of our production went to Belgium, Japan, and the United States. Today, with the phenomenon of development of Asian countries and China in particular, we have understood that China represents for the moment the power of the world's economy. China, which does not have cobalt today possesses firms that produce cobalt and succeeds in producing 9000 tons of cobalt. The part of enriched concentrated mineral which goes from Congo is mainly the heterogenite of the deposits of GECAMINE exploited illegally in the style of a cottage industry. We gain nothing from the importation of such minerals there the government must make an effort to produce mineral of value on the spot.
What is important is to succeed in giving value to the Congolese natural reserves, perhaps with the public-private partnership that could bring a new technology and give value to a structured economic development rigorously controlled by the state in a fiscal framework organised and stable.
The state must not ask private individuals to fight against poverty. It is the duty of the state. If it develops mining industry, a well organized state will have enough financial means. Presently, all that you have here as construction or town planning was done at the time of Union Minière because at the time of GECAMINES or during the second republic, all the money went to Kinshasa and nothing was built.
Do you know that our GNP was equal to the one of Canada in the 70s? There was money in Congo. They even succeeded in organizing the boxing match in 1974, between George Foreman and Mohammed Ali, which costed 250 million dollars, instead of putting this amount into the industry sector! We were so powerful that even the Chileans came to see what we were doing here. The metals used in GECAMINES were of excellent quality.

Summit Communications: What is the message that you would like to send to Americans?

Mr. NZENGA KONGOLO: It is a message of hope. We confirm that we have important mineral resources but that we have problems of financing and management. We believe that if we are together with American investors or others, we will surely succeed. We call upon American companies of copper or cobalt industry and other metals such as zinc and tin to come. We guarantee that they will be welcome. We will make in such a way that they make money and that the Congolese state gets a profit from it.
I am convinced that f we have big multinational companies installed here, this could be the guarantee of a sustainable peace that can enable an economic development and contribute to reduce poverty in a sustainable manner while giving a chance to private companies to gain money.
As such, we can recall here that Union Minière had gained money in Congo and has built part of Belgium with the money from Congo. It is a matter of pride for us and we would be glad if the same Congolese wealth would contribute to the construction of new structures, or a shopping centre. We would like to start the mining industries again with serious multinational companies. We already have big companies at our door such as ADASTRA, PHELPS DODGE among other big companies. If they succeed in starting something, I am convinced that it will be the beginning of a sustainable peace because if big companies are installed here, I don't se who will come to attack us.
At the time of Mobutu, when he was supported by the West and Kolwezi was attacked in 1974, in less than 48 hours, Belgian and French paratroopers came to defend the production tool. Nobody could disturb the installations of GECAMINES and all the basis infrastructures were spared.
At that moment, they wanted to punish Mobutu, but they punished the whole Congolese population. Today, Mobutu is no longer there and the country is re-organizing and we think that it is also the time when American investors and others must seize the opportunity that we represent, the geological scandal, in order to make good business.