08 May

High African Yields Raise Debt-Service Cost Concern, AfDB Says

Some African countries are overpaying for dollar bonds, raising concern about debt-service costs at a time when currencies are weakening against the greenback, according to the African Development Bank.

High interest rates make the continent’s bonds attractive to investors despite questions about the true extent of the debt loads of countries such as Zambia and the Republic of Congo.

“Raising a 30-year bond at a yield of 950 basis points — that’s very high,” AfDB President Akinwumi Adesina said in an interview in Johannesburg on Monday. Angola last week raised $1.25 billion selling a Eurobond due in 2048 at 9.375 percent.

Dollar bonds sold by African governments now yield 6.91 percent on average, compared with 5.66 percent in early January, Standard Bank Group Ltd. Indexes show. That compares with 6 percent for emerging markets generally.

African and emerging-market Eurobonds have sold off heavily in the last three weeks as the dollar strengthens and U.S. rates rise.

African nations have sold $18.3 billion of euro and dollar-denominated debt so far in 2018, already beating full-year records. Nigeria, Kenya, Senegal, Egypt and Angola have all issued 30-year tranches. Ghana is planning to sell as much as $2.5 billion of Eurobonds in 2018 and South Africa $3 billion.

The region’s average government debt ratio had increased about 20 percentage points in the past six years to 53 percent of GDP, according to Fitch Ratings Ltd. Still, public debt in Africa is far from crisis level, Adesina said.

Some nations will be better off selling local-currency bonds rather than take up foreign-denominated obligations, he said. That’s to avoid a currency mismatch, where the assets a government invests in generate income in local currency while the debt has to be repaid in a foreign denomination.

“If you have weak exchange rate, it means that you’re going to use a lot of your money to service your debt,” he said.

Nigeria announced plans last year to sell $5.5 billion of dollar-denominated securities, most of which would be to refinance existing domestic debt and reduce servicing costs.

To read the full article, click here.

30 Apr

Congo’s Katumbi to Return Home When Vote Certain to Go Ahead

Democratic Republic of Congo presidential hopeful Moise Katumbi said he’ll return from exile once he’s convinced long-delayed presidential elections are going to take place.

The 53-year-old former governor of Congo’s copper-rich Katanga province would be the likeliest candidate to replace President Joseph Kabila if he’s allowed to compete in elections scheduled for December, according to a poll published last month.

“The election time isn’t clear yet,” Katumbi said in an interview at a conference in the Rwandan capital, Kigali. “When it becomes clear, I will definitely go back.”

Congo, which hasn’t had a peaceful transfer of power since independence in 1960, was supposed to hold elections in November 2016. The electoral commission postponed the vote, citing financial and logistical constraints.

Opposition leaders have long accused Kabila, head of state since 2001, of delaying the vote in order to retain power and change the constitution. “Our constitution is very clear,” Katumbi said. “He has no right to run.”

Security forces have killed more than 300 people in nationwide anti-government protests since January 2015 in the run up to and following the end of Kabila’s second mandate, according to New York-based Human Rights Watch.

Elections are now scheduled for Dec. 23. Last week, a spokesman for Kabila’s ruling coalition said “no other solution is possible” than elections happening this year.

Katumbi has been in self-imposed exiled since May 2016, soon after he split with Kabila and announced an intention to succeed his former ally. A month later he was convicted in absentia for illegally selling a property, while two other investigations remain open — including allegations he violated Congo’s ban on dual citizenship.

 A month later he was convicted in absentia for illegally selling a property, while two other investigations remain open — including allegations he violated Congo’s ban on dual citizenship.

Katumbi denies the allegations and says the “fake, bogus” actions are politically motivated.

To read the full article, click here.

19 Mar

Congo Tamps Down Miners’ Expectations of Concessions on New Code

Miners operating in the Democratic Republic of Congo won’t secure substantial concessions in talks with the state about changes to the industry code, a senior mining official said.

Mining companies including Glencore Plc and Randgold Resources Ltd. are pressing the government to row back on some of the reforms President Joseph Kabila signed into law this month.

The modifications will raise taxes and other costs for operators in Congo, Africa’s top copper producer and the world’s main source of cobalt.

“There can be no renegotiation on any point once the code has been promulgated,” Albert Yuma, chairman of state-owned mining company Gecamines, said in an emailed response to questions on March 17.

Kabila met top executives from major foreign investors on March 7 to discuss their objections to the new law, which was approved by parliament in January.

The president signed the code March 9, but assured miners that “their worries will be taken into account” in talks with the government. Representatives of Glencore, Randgold, China Molybdenum Co., Ivanhoe Mines Ltd., MMG Ltd., Zijin Mining Group Co. and AngloGold Ashanti Ltd. attended the meeting.

The revised code removed a measure protecting mining-license holders from complying with changes to the fiscal and customs regime for 10 years. That means all mines face higher royalty payments and new taxes.

The new law also introduces a 50 percent tax on so-called super profits and hikes royalty rates on metals including copper, cobalt and gold. It also allows the government to raise royalty payments on cobalt five-fold to 10 percent if it opts to categorize the mineral as a “strategic substance.”

“The taxes and royalties to be paid have been fixed in the code by law,” said Yuma, who participated in the March 7 meeting. “No one can any longer change or remove them, or create new ones.”

The companies that met Kabila sent a team to the Congolese capital, Kinshasa, ahead of the talks with the Mining Ministry, according to a joint statement on March 15.


27 Feb

Congo Forces Kill Two Protesters in Anti-Kabila March

A group of Catholic activists, the Lay Coordination Committee, organized the protest against  President Joseph Kabila’s continuing rule of the central African nation. It was the third rally they’ve organized since Dec. 31, and all have turned deadly.

On Sunday, police and soldiers surrounded places of worship, discouraging attendance and preventing protesters from marching from their churches after services.

Security forces killed one person in the capital, Kinshasa, and another in the western city of Mbandaka, according to the UN statement, while more than 100 were arrested nationwide. Police spokesman Pierrot Mwanamputu told the state-owned television station no one was killed.

Activist and university professor Rossy Mukendi was shot dead in Kinshasa, according to Ida Sawyer, Central Africa director for Human Rights Watch.

“Security forces shot him in the thorax just outside Saint Benoit church in Kinshasa’s Lembe neighborhood, as protesters were ready to start the march after Sunday mass,” she said. Two others received gun wounds in the Masina district, while two more were badly beaten in the Kingasani district, Sawyer said.

Kabila, who has led Africa’s biggest copper producer since 2001, was to step down at the end of his second term in December 2016 after an election to find his successor.

That vote was delayed and Kabila remained in office, sparking protests in which dozens of people were killed by security forces. Congo, which gained independence from Belgium almost six decades ago, has never had a peaceful transfer of power.

In November, the electoral commission published a plan for presidential and parliamentary polls on Dec. 23, 2018, but opposition parties, which back the marches, are split on whether to support or reject the calendar.

To read the full article, click here.

23 Feb

Congo Bribery Probe Puts Israeli Billionaire’s Future on Hold

A 20-year friendship that helped turn Dan Gertler into a billionaire has left the Israeli businessman with a lot fewer places to go.

The U.S. government accused Gertler of corrupt mining and oil deals in the Democratic Republic of Congo and said he acted as a middle-man to enrich his longtime buddy, President Joseph Kabila.

The two have been close since Gertler arrived as a young diamond merchant during a civil war in 1997, and Congo — one of Africa’s poorest countries — is the main source of his wealth.

“Most of my business is in the Congo and my faith is in the Congo,” Gertler, 44, said in a rare interview on Dec. 21, just hours before the U.S. government imposed economic sanctions against him.

At the time, he remained defiantly optimistic about his businesses even as he was being singled out by American and British investigators conducting prolonged bribery and corruption probes related to some of his Congo deals.
“I am a strong believer in the future of the Congo,” he said. But doing anything inside and out of Africa has gotten a lot harder for him in the past two months.
Sanctions have shut Gertler out of the American financial system, halting access to the dollars that are the main currency used in Congo and in global raw-material deals. U.S. companies are banned from doing business with him. Former partners are distancing themselves.
“All our payments have ceased forthwith,” said Mark Bristow, the chief executive officer of Randgold Resources Ltd., which has a gold exploration project with Gertler’s Fleurette Group in northeast Congo. “We’ve got U.S. directors, and we are listed on the Nasdaq. We cannot entertain doing business and transacting in any form.”
To be sure, Congo’s government stands by Gertler, who still holds mineral and oil rights in the country and funds education and health centers.
To read the full article, click here.
09 Feb

Congo Army Campaign May Force More Than Quarter-Million to Flee

An offensive begun by the Democratic Republic of Congo’s army against rebels in the country’s east last month may force almost 370,000 people to flee their homes, the United Nations said.

Congolese troops launched the campaign against the Allied Democratic Forces, or ADF, and other armed groups active in North Kivu province, near the Ugandan border, on Jan. 13. An estimated 196,300 people are expected to flee in the territory of Beni, and a further 173,200 in Lubero as a result, the UN Office for the Coordination of Humanitarian Affairs said Thursday in a report.

Those fleeing would be in addition to the more than 532,000 who were displaced in the two territories during fighting in 2016 and 2017. Army spokesman General Leon-Richard Kasonga didn’t answer two phone calls seeking comment on the report.

Mineral-rich eastern Congo has been blighted by violence perpetrated by armed groups for decades, but in recent years many of these militias have fragmented.

There are about 120 armed groups in North and South Kivu provinces alone, up from 70 two years ago, according to the Kivu Security Tracker, a joint project of the Congo Research Group and Human Rights Watch.

More than 1,000 civilians in Beni territory have been killed in massacres since October 2014, according to the UN report. Congo’s government and the UN mission in the country have attributed most of the attacks to the ADF, a Ugandan Islamist group which has been active in Congo for more than two decades.

UN experts and the Congo Research Group say the situation is more complex and other militias, as well as senior Congolese army officers, have been involved in planning and carrying out the mass killings.

About 5 million Congolese are currently uprooted from the homes mainly due to conflict in the east and center of the country, including about 675,000 living as refugees in Congo’s neighbors, according to the UN.

Nearly a million people fled violence in the first half of 2017, outpacing conflict zones including Syria and Yemen, the Geneva-based Internal Displacement Monitoring Centre said in December.

Source: https://www.bloomberg.com/news/articles/2018-02-08/congo-army-campaign-may-force-more-than-quarter-million-to-flee

07 Feb

Congo Seeks More Control of the Cobalt Market

The Democratic Republic of Congo will seek greater control of the global cobalt market by engaging directly with car and battery manufacturers, according to its largest state-owned mining company.

“I find it scandalous that when cobalt is discussed, and the explosion of electric vehicles, only the traders and consumers are referenced and Congo and Gecamines are not cited,” Gecamines Chairman Albert Yuma said in an interview in Cape Town.

The market seems to think that “the future of cobalt is in the hands of Glencore, Trafigura and CMOC but not the Congo or Gecamines,” Yuma said. “We legitimately want to control the cobalt market because it is ours.”

Congo accounts for about two-thirds of global cobalt supply and spot prices for the metal more than doubled on the London Metal Exchange last year.

The country isn’t benefiting from rallying copper and cobalt prices and plans to renegotiate partnerships with international mining companies, Yuma said earlier Monday.

Gecamines has already held a discussion with one large Chinese battery producer about establishing a joint venture to develop the state-owned miner’s cobalt concessions, Yuma said. It is also planning discussions with a Chinese car manufacturer, he added, declining to identify either company.

Consumers want to secure, stable, long-term supply and, unlike traders, don’t speculate on price, he said.

Source: https://www.bloomberg.com/news/articles/2018-02-05/congo-seeks-more-cobalt-market-control-as-batteries-drive-boom

16 Jan

The Congo’s political crisis is stirring deadly violence in Kasai and beyond

Over the last couple of years, scores of activists have died protesting against President Joseph Kabila’s refusal to step down.

In the latest bout of nationwide demonstrations on 31 December 2017, at least seven more were killed as they took the streets. Many more were arrested.

However, it is not just the Democratic Republic of Congo’s (DRC) towns and cities that have witnessed violence as a result of the country’s deepening political crisis.

Kabila’s determination to stay in power despite his term officially ending in December 2016 has also aggravated more localised conflicts, causing widespread death and displacement.

Conflict in Kasai

One such conflict has devastated the Kasai region since mid-2016, leading to the displacement of 1.4 million people internally and 35,000 across the border with Angola.

The conflict first started as a dispute between a local customary leader and central authorities in Kinshasa.

But events escalated when the local chief was killed by the Congolese military. His followers formed a militia known as the Kamuina Nsapu and fighting quickly spread throughout a region roughly the size of the UK.

Refugees in Angola told International Refugee Rights Initiative (IRRI), which released a report on the violence today, that members of the militia entered their villages and beheaded state officials. They committed horrific violence, but most witnesses said the fighters did not target ordinary citizens.

In response, the Congolese army employed heavy force against the poorly-armed militia, which was mostly made up of children. After neutralising the group, they reportedly turned on the civilian population.

“They shot at everyone. They destroyed our houses and killed a lot of people,” said one refugee. “It was a slaughterhouse.” Along with others, he described how the army killed civilians, committed sexual violence, and looted and burned down many homes.

Inhabitants of another town caught up in the conflict described how a pro-government militia named Bana Mura (after Kabila’s presidential guard) also attacked Kamuina Nsapu and the local population.

To read the full article, click here. 


15 Jan

Glencore Shrinks Job of Billionaire Copper Head Amid Congo Probe

Glencore Plc reduced the role of its billionaire head of copper, Aristotelis Mistakidis, shaking up the business after a review in the Democratic Republic of Congo raised questions about accounting and management.

Mistakidis, one of Glencore’s largest shareholders and a key lieutenant of Chief Executive Officer Ivan Glasenberg for more than a decade, will lose control of industrial copper operations including mines and focus on the trading side of the business, according to people familiar with the plans.

Responsibility for Glencore’s copper assets will move to Mike Ciricillo, who now oversees copper smelting and refining, the people said, declining to be identified as the appointment isn’t yet public.

The shake-up reduces Mistakidis’s responsibilities after he and two other executives resigned from the board of Glencore’s Katanga Mining Ltd. in Congo in November. A review by Katanga led to a restatement of its financial reporting, and a commitment from Glencore to restructure the management of its own copper business.

Close Relationship

Mistakidis, whose holding in the company is valued at about $2.5 billion, is a key part of Glencore. He’s the third-biggest shareholder among management and helped lead the company’s ascent from a scrappy trader to a diversified commodities giant and the world’s third-biggest copper miner.

For years Mistakidis, better known as “Telis,” had run both the marketing and producing sides of the copper business, a testament to his record as a trader and close relationship with Glasenberg.

Ciricillo, who ran Freeport-McMoRan Inc.’s copper operations in Congo prior to joining Glencore in 2014, takes on the new role at a critical time for the Swiss commodity giant. Glencore plans to grow global copper production by about 25 percent to 1.64 million metric tons by 2020, largely through the resumption of operations at Katanga.

To read the full article, click here.

10 Jan

Congo May More Than Double Tax on Critical Global Cobalt Supply

The Democratic Republic of Congo is preparing to more than double a tax on two-thirds of global cobalt supply, potentially increasing the cost of the critical battery metal just as the world begins to embrace electric vehicles.

Congo, the world’s biggest cobalt producer, will increase the royalty miners pay on exports of the metal to 5 percent from 2 percent if it opts to categorize cobalt as a “strategic substance,” Mines Minister Martin Kabwelulu told the country’s Senate last week.

The new classification is part of an overhaul of mining legislation that is fiercely opposed by the industry, which says the law may deter future investment. Under the revised code, backed by the government and being scrutinized by parliament, the tax on base metals including copper and cobalt will increase to 3.5 percent from 2 percent. If approved by the Senate, the law will also allow the state to select “strategic” metals, likely to include cobalt, and tax them at a higher rate of 5 percent, Kabwelulu said.

A byproduct of copper and nickel mining used to harden steel, cobalt stepped into the global spotlight last year as prices surged. The metal’s efficiency in conducting electricity has made it essential for rechargeable batteries used in electric cars produced by companies including Tesla Inc. and Volkswagen AG.

Prices Triple

Plans to dramatically increase the production of electric vehicles resulted in the price of the metal more than tripling in the past two years as miners and automakers scrambled to secure supply. The boom hasn’t gone unnoticed in Congo, whose mines supply about two-thirds of global output.

The new legislation will guarantee Congo “the flexibility to face unforeseen developments in the international market if the international economic situation demands it” by permitting the government to declare certain minerals “strategic substances,” Kabwelulu told senators Jan. 5, according to a transcript of his remarks.

To read the full article, click here.