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Fight over mineral wealth shifts from battlefields to boardrooms
http://www.busrep.co.za/index.php?fArticleId=3943803&fSectionId=552&fSetId=662

By Peta Thornycroft

Lubumbashi - Why was fugitive Billy Rautenbach deported from the Democratic Republic of Congo (DRC) to Zimbabwe on Thursday? Why not last week or the week before, when he was flying to and from Lubumbashi?

An international warrant for his arrest was issued months ago as South Africa wants him to stand trial on allegations of massive fraud.

Many in Lubumbashi believe Rautenbach - long accused of stealing cobalt from Gecamines in his days as the state mining company's chief executive - has been felled by a furious fight over the jewel in the DRC copper crown, Katanga Mining.

There are two camps trying to buy control of the company, which is just coming on stream.

The first is a relative newcomer to the DRC, Israeli company Dan Gertler International (DGI). Its principal, Dan Gertler, has his head office in Tel Aviv.

Then there is British firm Central African Mining and Exploration Company (Camec), which, in anticipation of Rautenbach's problems with South Africa's National Prosecuting Authority, bought his DRC assets last year.

On Thursday Rautenbach flew out of the DRC on his executive jet for the last time - in this phase of his life - after nearly a decade of wheeling, dealing, threatening, and perhaps doing the normal round of "favours" in Harare and Lubumbashi.

To his credit, unlike some whose only mining activity in the DRC is on the world's stock markets, Rautenbach also does real mining. He digs out the earth, processes the ore, and exports the valuable metal; he also pays taxes and earns valuable foreign currency for Kinshasa.

Now he has gone to ground on his estate in the exclusive Umwinsidale suburb on the outskirts of Harare, and is not answering his phones.

Perhaps Rautenbach, who is one of the largest shareholders in Camec, is musing more on his vast wealth and whether the Zimbabweans will expedite his extradition, than on being kicked out of Lubumbashi.

On Thursday Andrew Groves, the chief executive of Camec, in his normal volley of bombast, denied that Rautenbach had been forced to fly out of Lubumbashi as a prohibited immigrant, as claimed by Moise Katumba, the governor of Katanga.

"He has been in and out regularly on business and will be back again. This is all political and we know the press is putting out lies. We know who they [the press] are working for.

"Camec doesn't need Billy Rautenbach. We did at the beginning but now we have a fully competent staff running the operations. He is just a shareholder now," Groves said.

He added: "We are looking forward to George Forrest becoming chairman of the company."

Forrest is the chief executive, and the largest shareholder, of Katanga Mining, which is listed on the Toronto Stock Exchange.

He has a long and chequered history in the DRC. He is a street fighter and survivor, who actually lives in Lubumbashi, is active in mining and employs thousands of Congolese.

He is extraordinarily rich, and his early wealth is mired in the nasty histories of Angola and the DRC, but today he is genial and wants the DRC to prosper. His three sons have remained in the country, work in his firms and are there to stay.

While Forrest will say nothing on the record, his associates claim that he has decided to get into bed with Camec to stave off the assault he believes is coming from Gertler, Camec's rival for Katanga Mining.

"Katanga Mining is in good shape. It is the only game in town right now," Forrest said in an interview in Lubumbashi this week. This is at least part of the reason the battle for his company is heating up.

When Camec began its raid, buying 23 percent of the shares in Katanga Mining, the latter's major Canadian shareholders took measures to stop an attempted takeover. At that time, DGI had bought 17 percent in Katanga Mining.

Gertler got into DRC when he took a majority stake in state diamond firm Société Minière de Bakwanga for $15 million (R103.6 million), but that project is not going well.

Then, in a record two weeks of negotiations in 2004, Gertler secured a stunning joint venture in Katanga with Gecamines. Now called Nikanor, it owns cobalt and copper deposits as well as a concentrator plant and is already on stream.

Gertler was at President Joseph Kabila's wedding before elections last year, and is reportedly close to important people in Kinshasa.
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He vastly overpaid Zimbabwean businessman John Bredenkamp for his assets in Katanga.

Bredenkamp knew nothing about mining, his world has always been tobacco and military hardware. He got the mining assets for free in the first place, a gift from the late DRC President Laurent Kabila.

Bredenkamp was on the rack, down to his last $20 million or so, his properties in Europe were mortgaged, and he had to flog off or lease out a couple of his aircraft.

He needed to sell DRC mining properties, including the world's richest cobalt deposit, Mukondo.

Bredenkamp was owed about $10 million for supplies he provided to the Zimbabwe National Army, which fought on Kabila's side in the war in the late 1990s. He had been the guarantor of payment for Russian helicopters for Kabila.

So Kabila's gift was part in lieu of unpaid debts and partly to compensate the Zimbabwe government.

Rautenbach also got into the DRC as part of Kabila's obligations to Zimbabwe.

Whether either men ever paid off the Zimbabwe government, which provided the army and critical support to Kabila, is mired in a dark corner of untold history in a bleak period of the DRC's tormented past.

Suffice to say they got into the DRC because they were Zimbabwean citizens - seen by Kabila as allies of President Robert Mugabe - and both men were protected by powerful forces in Mugabe's ruling Zanu-PF.

Rautenbach was made chief executive of Gecamines and given valuable copper claims in partnership with the Zimbabwe government. He was forced out of DRC when Kabila accused him of stealing cobalt. His assets were taken away and given to Bredenkamp.

But the tables turned.

With Harare's influence - and because he went to court and won the case - Rautenbach was suddenly handed half of Bredenkamp's assets in Katanga in 2004, which now included a half share of Mukondo, the cobalt mountain that is said to be the richest in the world.

So with Bredenkamp in a financial crunch, unable to pay creditors in the DRC, and knowing nothing about mining, he leased his share of Mukondo to Rautenbach. And it did well, exporting 600 tons a month.

Last year Bredenkamp offered Mukondo and the concentrator to Rautenbach for about $20 million, but Rautenbach laughed and offered half that amount. The two men were at war.

Suddenly, in June last year, Bredenkamp was summoned to Kinshasa for an interview with Joseph Kabila, Laurent's son, who would soon become the DRC's first democratically elected president.

A deal was struck in mysterious circumstances and Gertler massively overpaid Bredenkamp roughly $60 million for his cobalt mountain and the concentrator.

Bredenkamp returned about $8 million, maybe to pay off the Zimbabwe government, or for Kabila's election campaign, but he never disclosed details of that transaction.

With Bredenkamp flush again and out of the way, Rautenbach tried to lease Mukondo and the concentrator from Gertler, who turned him down even though maintaining those assets without production cost him about $750 000 a month.

So the cobalt mountain is dormant, the concentrator is idle, and Rautenbach's, or rather Camec's, valuable exports have ceased.

Camec did not reveal that to shareholders until press reports forced it to do so late last year.

Meanwhile, Forrest, the old DRC fox, was building Katanga Mining, which comes on stream this year, at a time of superb copper prices and abundant skilled personnel, and the confidence of world markets..

But who will win? It does not look good for Camec right now, with Rautenbach out the picture, however much Groves protests that the Zimbabwean is not needed any longer.

Camec is a troubled firm, with questionable ability to develop its assets, staff problems and, perhaps most importantly, it has offended powerful people in Kinshasa.

After it lost revenue from Mukondo, Camec built a metals producing plant in Luita in Katanga, but no one is sure how much it costs to produce the metals, and there are serious questions about the longevity of the hastily constructed plant.

Forrest gave a clue to the possible outcome when he said: "Rautenbach is not only interested in mining on stock exchanges, he is prepared to get his hands dirty and actually get involved in mining in Katanga." - Independent Foreign Service