Gecamines may sell assets to fund overhaul

KINSHASA: Congo's state-owned mining company Gecamines could put non-strategic assets on the block to help it fund a $930 million drive to become a major producer, the company said on Saturday, though it does not have plans for a major sell-off.

Gecamines, which is saddled with $1.6 billion of debt, produced 18,000 tonnes of copper last year but is hoping to hit 100,000 tonnes by 2016 after an ambitious investment programme aimed at modernising the former mining heavyweight.

While the company does not plan a major sale of its holdings, it could do in some cases to unlock cash, the president of the board of directors, Albert Yuma, told Reuters.

"Gecamines, (which) is today confronting difficulties in accessing funding due to the weight of its liabilities, has decided it is able to cede certain non-strategic assets, but exclusively to fund modernisation," he said.

In a deal earlier this year which was not disclosed publicly at the time, Gecamines sold its 20 percent stake in Glencore-operated Mutanda Mining, a cobalt and copper producer, for $137 million, a price tag which some analysts have said was below its real value.

Yuma said the decision to sell was taken following an independent valuation by BNP Paribas.

"We decided to sell it now to fund our investments, but for the moment we have not yet evaluated other (potential sales)" he said.

Yuma said Gecamines was committed to greater transparency, though the company is not bound by regulations imposed on the government by the World Bank in order to encourage Kinshasa to clean up its often opaque mining sector.

"We have put in place a communications department to communicate everything we will be doing

But the matrix and criteria put in place by the World Bank for the government no longer applies to Gecamines," he added.

Gecamines was converted to a commercial enterprise at the end of last year, though it is still owned by the government.

The transparency rules require all "public mining enterprises" to publish new contracts within 60 days of signing.

Copyright Reuters, 2011