CIVIL society groups and an MP in the Democratic Republic of the Congo (DRC) are raising concerns that state-owned gold company Sokimo failed to follow an open and transparent bidding process before agreeing to sell its stakes in six gold assets, including 10 percent of the DRC’s biggest gold mine, Kibali, to Canada’s AJN Resources.
The criticism follows action by Barrick Gold to block the proposed sale to AJN, after AJN on February 6 said it had reached a memorandum of understanding with Sokimo. Barrick and AngloGold Ashanti each own 45 percent of Kibali, and Sokimo may not sell or transfer its Kibali stake without their approval.
Barrick said last week that Sokimo had not sought approval for the sale, and said ‘nor will it be granted.’ Last Wednesday, Reuters reported that Barrick had issued a cease-and-desist order to block the sale.
AJN’s Canada-listed shares have plunged 48.7 percent since the cease-and-desist order was reported, including a decline of 28.6 percent on Friday.
Civil society is demanding that the government justify the deal, under which Sokimo would sell its 30 percent stakes in the Zani-Kodo, Nizi and Kibali South projects, and 35 percent stakes in Giro Goldfields and Wanga (Tendao), as well as the Kibali stake.
‘For us, this transaction is very unfavourable for the Congolese state,’ said Jean-Pierre Okenda, DRC country manager for the Natural Resource Governance Institute.
Sokimo’s assets should have been independently valued before the memorandum of understanding was signed, and they should have been put to open tender in accordance with Congolese law, Okenda added.
Roger Abotome Bekabisya, a National Assembly representative of Watsa district in Haut-Uele province, wrote to DRC’s minister of portfolio on Monday demanding the details of the deal and the value of the stakes Sokimo would sell to AJN.
‘It is best that we get an official response, to know the truth,’ Abotome Bekabisya said. Watsa is the nearest town to Kibali gold mine.
Cogep, a Congolese natural resource governance NGO, said Prime Minister Sylvestre Ilunga should intervene to halt the sale and demanded the minister of portfolio make a public statement to clarify the situation.
DRC’s minister of portfolio manages the country’s state-owned enterprises and approved the AJN-Sokimo memorandum of understanding, according to AJN’s CEO, Klaus Eckhof.
According to the memorandum of understanding, Sokimo would exchange its assets for a 60 percent stake in a newly capitalised AJN, but with only two out of five board seats.
Eckhof had not responded to requests for comment by Friday. The prime minister’s office declined to answer Reuters’s questions.