The Prime Ministerial Decree no. 23/08 establishing the terms and conditions for the sale of mining assets of the state-owned companies came into force on 22 February 2023 (the Decree).
The Decree has introduced a procedure applicable to transactions by Congolese state-owned companies in relation to their mining assets.
The main objective of this Decree is to ensure that disposals of mining assets are carried out in a transparent and consistent manner, protecting the interests of the State and the state-owned companies involved. It also aims at preventing the sale of the assets at a price lower than their real value.
1. State-owned companies
A state-owned company (entreprise publique) is a company in the State's portfolio in which the State or any public legal person holds all or an absolute majority of the shares. The relevant state-owned companies include the following:
Congolaise de l'Exploitation Minière (COMINIERE) S.A.,
Société de Développement Industriel et Minier au Congo (SODIMCO) S.A.,
Générales des Carrières et des Mines (GECAMINES) S.A.,
Entreprise Minière de Kisenge Manganèse (EMK-MN) S.A.,
Société Minière de Bakwanga (MIBA) S.A.,
Société Aurifère du Kivu et du Maniema (SAKIMA) S.A,
Société Minière de Kilo-Moto (SOKIMO) S.A.
2. Relevant transactions
The transactions covered by the Decree include:
The total or partial transfer of mining assets to one or more natural and/or private legal persons in return for financial consideration;
Entering into a public-private partnership that allows the state-owned company to divest its assets without transferring ownership, such as the amodiation [1];
The creation of a joint venture with one or more natural and/or private legal persons, involving the transfer of mining rights as a contribution to the capital of the new entity.
3. Procedure
The procedure for concluding a transaction involving a state-owned company's mining assets involves several key stages:
1) Initiation of the transaction. The relevant state-owned company or the government takes the initiative to conclude a transaction on mining assets.
2) Preparation of the project. The state-owned company and/or the government technical body responsible for divestment prepares(s) the transaction project.
3) Validation and proposal. Where appropriate, the project is validated jointly by the Minister of Portfolio and the Minister of Mines, and is then proposed to the Government.
4) Decision by the Council of Ministers. The project is submitted to the Council of Ministers for a decision.
5) Asset valuation. An independent valuation is carried out to assess the real value of the relevant mining assets.
6) Preparation of the specifications. The Steering Committee for the Reform of State Portfolio Companies (Comité de Pilotage de la Réforme des Entreprises du Portefeuille de l'Etat or COPIREP) draws up specifications (cahier des charges).
7) Selection of the partner. The partner must be selected through a call for tenders, published in the State Gazette (Journal Officiel) and in several press organs. The bids are then evaluated by an ad hoc committee. In exceptional circumstances where the call for tenders has not lead to any bid, selection through direct agreement procedure (procédure de gré-à-gré) may be considered.
8) Final decision. The bid evaluation report, the award proposal and the draft agreement are then submitted to the Council of Ministers for a decision. The Council of Ministers' decision is formalised in a decree of the Prime Minister
The Decree also provides that a proportion of the revenue from each transaction will be paid into the Special Portfolio Fund (Fonds Spécial du Portefeuille). The exact amount of this share will be determined on a case-by-case basis by the Government.
4. Calls to strengthen the current legal framework
This new Decree is a significant step forward after many years of opaque transactions in the DRC's mining sector, which have resulted in significant losses for the public treasury. Civil society organisations (including the Observatoire d'Études et d'Appui à la Responsabilité Sociale et Environnementale (OEARSE) and Congo n’est pas à vendre (CNPAV)) welcome this step forward, while stressing the importance of further strengthening the existing legal framework.
Nicolas Dupont [2] - August 2023
[1] Amodiation: leasing for a fixed or indefinite period, without the option of subleasing, of all or part of the rights attached to a state-owned company's mining rights, in return for remuneration fixed by agreement between the lessor and the lessee.
[2] The author would like to warmly thank Déborah Dia, a law student, for her precious help in writing this article.