TFM EXPORTING COPPER DESPITE UNRESOLVED CONTRACT

S E C R E T SECTION 01 OF 02 KINSHASA 000493

SIPDIS

E.O. 12958: DECL: 05/22/2019
TAGS: ECON EINV EMIN ETRD PGOV PREL CG
SUBJECT: TFM EXPORTING COPPER DESPITE UNRESOLVED CONTRACT
REVIEW; KATANGA GOVERNOR COMPLAINS ABOUT FROZEN BANK
ACCOUNTS

REF: A. KINSHASA 399

B. KINSHASA 269

Classified By: Ambassador William J. Garvelink for reasons 1.4 (b) and
(d)


1. (S) Summary: Ambassador visited the Tenke Fungurume
Mining (TFM) site, the largest U.S. investment in the DRC, on
May 7. TFM is currently producing copper and will soon be in
cobalt production as well. The visit provided an opportunity
for the ambassador to see first-hand TFM's USD 1.75 billion
investment, the speed with which TFM constructed modern
facilities, and the wide reach of TFM's corporate social
responsibility programs. Ambassador also used the visit to
highlight the need for the DRC to conclude its mining
contract revisitation, a process that has dragged on now for
over two years. Katanga Governor Moise Katumbi told
ambassador on May 8 that he agreed that delays in the
contract review process are having a negative impact on other
investments in the DRC. Katumbi also complained at length
about his and his family's frozen bank accounts in Belgium,
related to accusations of his brother providing funding for
Nkunda and rebel groups in the eastern DRC. End Summary.

TFM PRODUCING AND EXPORTING COPPER; COBALT ON-LINE SOON
-------------- --------------


2. (U) Ambassador and econoff visited Freeport McMoRan's
Tenke Fungurume Mining (TFM) site on May 7, 110 miles
northwest of Lubumbashi in Katanga province. TFM invested
approximately USD 1.75 billion in the first phase of its
development to bring its copper and cobalt production
on-line, and still stands as a bright spot in Katanga's
otherwise declining economy (Ref A). Ambassador toured the
entire site, including the open mining pit, the
semi-autogenous grinding mill, the facilities used for
solution extraction and electro winning (a chemical and
electrical process used to extract the copper),and the
building used to cut and prepare the sheets of copper cathode
for shipping. The first truckload of copper was exported on
April 22, and TFM is on schedule to reach full capacity of
250 million pounds of copper and 18 million pounds of cobalt
annually sometime during the second half of 2009.


3. (U) Ambassador and econoff also visited several of the
TFM-funded social responsibility programs, which target the
local community of approximately 61,000 inhabitants. TFM
reported expenditures of USD 9 million for community
development (schools, clinics, clean water wells, and
markets),USD 2 million for malaria control programs, and USD
12 million to resettle 350 households in three villages that
were too close to the mining operations. Ambassador noted
the new brick homes constructed for the resettlements were a
significant improvement over the previous village's homes,
and the program is popular with the local population to the
point that others are moving closer to the concession's
operations in the hope of being resettled. TFM is also
working with NGO PACT Congo to provide microcredit to small
business entrepreneurs engaged in brick and fence
construction and other activities.

THE MINING REVIEW THAT NEVER ENDS
--------------


4. (SBU) Local reporters accompanied ambassador and econoff
on the entire tour, and ambassador spoke with the press at
the end of the visit. Ambassador expressed the importance of
the large-scale U.S. investment, and urged the Government of
the DRC (GDRC) to quickly finalize the mining contract review
process. Ambassador noted that many investors in the United
States, as well as in other countries, are watching and
waiting to see how the review process ends before committing
to investments in the DRC. Most government officials have
been saying the formal review is nearing its end for several
months now, just as the Prime Minister's Deputy Chief of
Staff noted on March 20 (Ref B).


5. (SBU) There are six large contracts, including that of
TFM, that have not yet been approved by the DRC's
Presidential Cabinet ("Conseil des Ministres"),which is the
only body with authority to accept or reject these contracts.
The DRC's Vice Minister of Mines, Victor Kasongo, told
Reuters on April 16 that the GDRC rejected TFM's and First
Quantum's contracts, but was later forced to retract the

KINSHASA 00000493 002 OF 002


statement following pressure from Vice Prime Minister Emile
Bongeli. Though Bongeli and seemingly most of the GDRC claim
to be in favor of quick resolution to the review and appear
to be in favor allowing TFM's investment to move forward,
there is no indication of when the Cabinet will finally issue
its approval.

MOISE KATUMBI WANTS HIS MONEY BACK
--------------


6. (SBU) The ambassador and econoff also met with Katanga
Governor Moise Katumbi on May 8, who agreed with ambassador's
assessment of the positive contribution of TFM's operations.
Katumbi told ambassador the mining
revisitation would eventually ruin the DRC by scaring away
all other investment if it is not concluded quickly. Katumbi
said he had already raised the issue with the GDRC, but
promised to raise it again with President Kabila, who planned
to stop in Lubumbashi on his way to visit newly-elected
President Zuma of South Africa. Ambassador spoke to the
local press again following the meeting with the Governor,
noting the same urgency with which the GDRC should conclude
the review process as it is in the interest of the DRC and
the Congolese people. Ambassador also answered a question
about U.S. investment in the DRC by noting the other
important U.S. investments in the DRC and by explaining how
the U.S. provides over USD 700 million annually in a
combination of aid through bilateral programs, multinational
organizations, and MONUC.


7. (S) Katumbi also spoke at length about the Belgian
authorities seizing his and his family's bank accounts in
Belgium. Katumbi said the UN pushed the Belgian authorities
to do so because they claimed Katumbi's brother financed
Nkunda and other rebel groups in the eastern DRC. Katumbi
claimed the Belgian authorities only needed a letter from the
Congolese central government, specifically from the Ministry
of Foreign Affairs, to exonerate him and release the funds.
He said they have since released the accounts of his sister
and his brother-in-law, but that they still had a freeze on
his personal accounts. Katumbi expressed a degree of fatigue
with the scenario, noting he is coming to the end of his
political career, and said he did not know why the GDRC in
Kinshasa would not help him with this predicament.


8. (S) Ambassador spoke with UK Ambassador to the DRC Nick
Kay on May 12 and mentioned Katumbi's story. Kay said
British law enforcement had already been in touch with him
about the strange activity with Katumbi's, and Katumbi's
wife's, bank accounts. Kay implied there was more of an
investigation underway than just Belgian authorities acting
alone. Kay said he thought the UK might have already
contacted the DRC authorities directly concerning Katumbi's
accounts.

COMMENT
--------------


9. (S) The brother of Moise Katumbi, Raphael Soriana a.k.a.
Katebe Katoto, has been linked to financing Nkunda's
rebellion and to financing Jean-Pierre Bemba's movement
before that. Katumbi and Soriana are both active businessmen
with investments in some of the same projects in the DRC and
Zambia. It remains to be seen whether there are direct or
indirect links from Katumbi to rebel activity in the Kivu
provinces, but the ongoing investigations are undoubtedly
targeting Katumbi's entire family to ascertain who might be
providing sources of funding for illicit activity in the
east. It is no surprise that Kabila and his supporters in
Kinshasa would not go out of their way to help Katumbi, as
Katumbi may have the political strength in Katanga and
surrounding provinces to eventually challenge Kabila for the
Presidency. End comment.
BROCK