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Cablegate: Drc Mining Extracts, #2

VZCZCXRO8750
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #0181 0461230
ZNR UUUUU ZZH
R 151230Z FEB 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 5609
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEAIIA/CIA WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS KINSHASA 000181

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EMIN EINV ECON PGOV CG
SUBJECT: DRC MINING EXTRACTS, #2

REF: A. 06 KINSHASA 1737
B. 06 KINSHASA 1621

1. (U) Summary. DRC's three mining parastatals are
considering public offerings of their shares. DRC's
copper/cobalt and gold mining parastatals continue two
much-publicized disputes with foreign mining companies. The
CEO of DRC's copper/cobalt mining parastatal has said he
intends to focus on amending but not canceling mining
contracts with foreign investors. Coltan trade in Eastern
Congo continues to decrease. End summary.

GOLD
----

2. (U) Victor Kasongo, the outgoing CEO of OKIMO (the DRC's
gold mining parastatal) has publicly said he wants to list
the company on the London Alternative Investment Market (AIM)
in 2007. Kasongo has been nominated as Vice Minister of
Mines.

3. (SBU) The dispute continues between Canadian Moto
Goldmines and OKIMO over their joint venture in Orientale
province. Kasongo says Moto has not complied with existing
agreements and has threatened to have the contracts canceled
or revised if Moto does not soon comply with its obligations.
Kasongo claims Moto's most recent agreement with OKIMO,
signed in November 2006, is invalid because he did not
approve it (reftel A).

DIAMONDS
--------

4. (U) South African company Mwana Africa has announced it is
discussing proposals to publicly list MIBA, the DRC's diamond
mining parastatal. Mwana owns a 20 percent interest in MIBA
and is itself listed on the London AIM.

5. (U) A diamond trader paid USD 1.4 million for a 143-carat
rough diamond a miner discovered in Orientale province. A
diamond/gold diggers' association reportedly will share the
proceeds, although the organization has complained it was
cheated and should have received several million more
dollars.

COPPER/COBALT
-------------

6. (U) Paul Fortin, CEO of Gecamines, the DRC's copper/cobalt
mining parastatal, said the company plans to review and
renegotiate some of its joint venture contracts with foreign
investors to address problems in the agreements, but does not
intend to cancel any. However, trade press reported in 2006
that Fortin wants to cancel at least its inactive mining
contracts. Fortin also indicated he is still considering both
a bankruptcy filing and an initial public offering as means
to reduce Gecamines' estimated USD 2.4 million debt.

7. (U) Tensions recently rose between Tenke Fungurume Mining
(TFM), Phelps Dodge's joint venture copper/cobalt mining
project in Katanga province and residents of Fungurume, a
town in which TFM bases some of its mining operations. Some
Fungurume residents reportedly protested over their
perception that TFM is hiring expatriate workers at the
expense of the local labor pool. Discussions among the
residents, TFM and the Vice Governor have reduced tensions
and helped calm the situation.

8. (U) The final court hearing in the lawsuit between
Gecamines and First Quantum/Kumba Resources is scheduled for
February 23 in Belgium. Gecamines disputes the companies'
claim to rights in a zinc-copper concession in Katanga
province on the grounds that the parties never entered a
final, binding agreement (reftel B).

COLTAN
------

9. (SBU) Coltan trade in eastern Congo continues to decrease,
according to the President of the Chamber of Commerce in
Goma, North Kivu. The businessman told PolOff coltan's
depressed world price and its easy confusion with other, less
valuable minerals, are the main factors in the drop in trade.
MEECE

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