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Cablegate: Drc Mining Extracts, #4

VZCZCXRO4715
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #0607/01 1551640
ZNR UUUUU ZZH
R 041640Z JUN 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 6230
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK

UNCLAS SECTION 01 OF 02 KINSHASA 000607

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EMIN EINV ECON PGOV CG
SUBJECT: DRC MINING EXTRACTS, #4

REF: A. KINSHASA 579
B. KINSHASA 187

1. (U) Summary. The GDRC's mining contract review commission
is expected to begin meeting the week of June 4. GDRC
officials have announced investigations into London
AIM-listed CAMEC and its purchase of shares in the George
Forrest-associated Katanga Mining Company. Diamond mining
parastatal MIBA has a new management board. DeBeers
continues diamond exploration in the Kasai provinces. The
U.N.'s Office of Internal Oversight Services is investigating
allegations that Pakistani peacekeepers engaged in gold and
arms trafficking in Ituri in 2004-2005. End summary.

GENERAL MINING SECTOR NEWS
--------------------------

2. (U) The first formal meetings of the DRC's mining contract
review commission are set to occur the week of June 4,
although the commission does not yet have financing (reftel
A).

3. (U) Katanga Governor Moise Katumbi continues to restrict
companies from exporting unprocessed ore from the province
without a prior agreement permitting them to do so.

4. (U) The World Bank is preparing to release its mining
sector review, conducted earlier in 2007, as soon as mid-June.

5. (U) The criminal case in Katanga province involving Anvil
Mining (reftel B) resumed proceedings in May after military
officials twice replaced the prosecutor.

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

6. (SBU) London AIM-listed CAMEC's purchase of 22 percent of
the Toronto Stock Exchange shares of Katanga Mining Company
for several hundred million dollars has drawn the attention
of Congolese officials. Katanga Mining is the holding company
for Kamoto Copper Company, a joint venture between George
Forrest enterprises and Gecamines to develop a project in
Kolwezi, Katanga. According to MONUC reports, the Katanga
Provincial Assembly has formed a commission to investigate
the legality of Katanga Mining's listing of shares, which
some provincial deputies claim occurred without the
permission or knowledge of Gecamines or provincial officials.
Officials also allege that neither the provincial government
nor Gecamines will receive any proceeds from Katanga Mining's
share sales.

7. (SBU) The Vice Minister of Mines, Victor Kasongo, has
announced a related investigation into CAMEC, publicly
stating the GDRC's concerns about the company are based on
alleged outstanding charges against its shareholder Billy
Rautenbach, a former Gecamines CEO. Kasongo also said the
GDRC suspects the transaction is a money laundering scheme.
In a May 15 letter to Kasongo, CAMEC's attorneys denied
Kasongo's claims and labeled them as defamatory.

DIAMONDS
--------

8. (U) The Minister of Portfolio replaced the chief
executives of the diamond mining parastatal, MIBA, on May 8,
citing their inability to make the heavily-indebted company
profitable. The Minister also announced measures to address
demands of MIBA employees, including payment of salary
arrears, thus ending the employees' strike. To pay salaries,
MIBA borrowed from a commercial bank and used mining titles
as collateral, sparking rumors that the bank - which does
business with several diamond sector operators - was buying
MIBA.

9. (SBU) In early May a DeBeers Diamond Company manager in
the DRC told EconOff its exploration efforts, ongoing for
more than a year in the Kasai provinces, have uncovered 15-18
Kimberlite pipes. However, the official did not say how many
may yield marketable diamonds. DeBeers' goal is to be
operating two mines in the DRC by 2010. DeBeers entered into
joint-venture agreements with MIBA and other partners in
2005.
GOLD
----


KINSHASA 00000607 002 OF 002


10. (U) International and local media have reported
allegations that Pakistani peacekeepers in Orientale province
trafficked gold and arms in 2004 and 2005. The troops are
alleged to have illegally obtained gold from a concession in
Mongbwalu, Ituri District and sold the gold, as well as arms,
to Congolese militia groups. The U.N.'s Office of Internal
Oversight Services is investigating the allegations.

URANIUM
-------

11. (U) U.K. company Brinkley Mining continues to press the
GDRC to grant its subsidiary, Brinkley Africa, uranium
exploration rights in Katanga pursuant to a 2006 Memorandum
of Understanding approved by the Ministers of Mines and
Scientific Research.
MEECE

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