Chinese copper entrepreneurs flee DR Congo

Published on Monuc, 20 feb 2009

More than 40 Chinese-run copper smelters are standing idle in the Democratic Republic of Congo after their owners fled the country without paying taxes or compensating staff at the end of the commodity boom, according to a governor.

Moïse Katumbi, governor of Katanga province, which is bisected by Congo’s copper belt, said Chinese entrepreneurs abandoned their smelters in a matter of days in a co-ordinated move at the end of last year as copper prices tumbled.

Asked if they would be welcomed back if the price rebounded, he told the Financial Times: “No, no, no. Not as long as I am governor. Katanga is not a jungle. They worked as if it was a jungle.”

Katanga’s notoriously rough-and-tumble mining sector enjoyed a heady boom in recent years as commodity prices soared and foreigners rushed in to exploit its copper deposits. The Chinese entrepreneurs who came were part of their country’s small-scale, private sector-led engagement with Africa.

This has occurred alongside, but not always in conjunction with, a state-driven effort to secure resources, which last year led to a $9bn minerals-for-infrastructure deal between China and Congo.

When global commodity prices tumbled, the result in Katanga was painful: in the space of weeks luxury house-building projects and freshly imported Jeeps vanished to be replaced by unemployment and rising crime.

The abrupt downturn has released resentment over the conduct of some Chinese businesses in Africa, where hard bargaining and a lack of warmth towards local people won them few friends.

“Some serious companies remain with metallurgical plants. I don’t have any problem with them. But they are 10 per cent of the Chinese who were here. Ninety per cent have gone,” Mr Katumbi said, dismissing them as “speculators”.

“They didn’t pay their people, they didn’t respect anything. We have already written to them to ask them to give severance pay to their staff and to pay the tax due to the government.

“If they don’t, we are going to ask the court to auction their properties to pay the bills.”

ACIDH, a Congolese human rights advocacy group, is preparing to publish a report that details the “cruel and inhumane” treatment of employees at three Chinese smelters.

But Congo’s mining sector has long been renowned as a harsh and poorly regulated place. Chinese companies are the latest in string of businesses to face accusations of ignoring the labour and human rights of their employees.

Karen Hayes of Pact World, a group that works with mining companies to manage their social impact, said of the Chinese entrepreneurs: “They were opportunists, but we are told that they always paid and they always paid cash. Otherwise they seemed to be focused on the bottom line.

“I think it comes down to having different priorities and perceptions of rules and regulations and health and welfare. But frankly, there are plenty of others who are the same,” she added.

Wu Zexian, China’s ambassador to Congo, said he did not know much about the operations of Chinese smelters in Katanga.

“Our policy is always that Chinese companies operating outside China must respect the laws and regulations of the countries where they work. That is very clear. But we can never be 100 per cent sure that all companies do that,” he said.

Industry experts say that smelters in Congo can produce a tonne of copper for about $3,500. That yielded a handsome profit when the copper price was at a peak of nearly $9,000 a tonne last August, but is unsustainable at current prices of $3,200.

The smelters purchased unpurified copper from artisanal miners – men who work on their own, often illegally, and account for a large proportion of Katanga’s output – before processing it and selling it overseas.

Each smelting company employed an average of 150 people, Mr Katumbi said, creating jobs that he acknowledged were desperately needed in a country wracked by poverty.

Several smelters are in Lubumbashi, the Katangan capital, where their gates remain padlocked and protected by Congolese guards, a sign the owners have left open the option of returning.

“I don’t think they’ve left definitively,” said Mr Wu. “I spoke to one man who said they’ll come back in one or two months when the situation improves.”

More resources

Financial Times Chinese copper entrepreneurs flee DR Congo
Donors press Congo over $9bn China deal
Hu launches China’s “largest gift” to West Africa

About Congo on 2bloggen

The conflict in the Congo is a resource war waged by U.S. and British allies by Kambale Musavuli (This posting)

Chinese copper entrepreneurs flee DR Congo

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