Kazakh miner ERG denies circumventing Congo subcontracting laws

Erg SA

24/04/2024 18:51

KINSHASA, April 24 (Reuters) - Kazakh miner Eurasian
Resources Group (ERG) has denied accusations it tried to bypass
Democratic Republic of Congo's subcontracting laws designed to
boost local ownership in the mining sector, job creation, and
benefits to the country's economy. 
    In a statement published last week, Congo's government
accused ERG of passing off nine subcontracting companies as
majority partners with "fictitious" shares in order to
circumvent legislation requiring that Congolese shareholders own
50% of subcontracting shares.
    The Regulatory Authority for Subcontracting in the Private
Sector, a government body, said that more than $535 million in
sales had wrongly gone to foreign-owned subcontractors in 2023.
    It said it would "take appropriate measures followed by
exemplary sanctions" against what it described as the "proven
cases of fraud."
        The fraud has been discovered within ERG's assets
Metalkol, Comide, Frontier, Boss Mining and its subcontractors
Rocada, Roche Solide, Standar Fiable, Technologies Global,
Etalon SA, Surtek, Socom, Transversal and Vision, the regulator
said.
    On Wednesday, ERG responded to the accusations, stating that
the subcontractors were not directly associated with it.
    "ERG categorically denies any involvement in illicit
activities," the company said in a statement, adding that it has
been exchanging information with the regulatory authority.
     Luxembourg-Based ERG is owned jointly by 3 private
shareholders and the government of Kazakhstan which has the
remaining 40% stake.
    The firm is addressing identified discrepancies in contracts
with suppliers found ineligible under applicable laws, and
actively seeking alternative suppliers, ERG said.
    Congo state miner Gecamines said in February it had made an
offer to buy three of ERG's copper and cobalt assets in the
country.

 (Reporting by Ange Kasongo, Felix Njini and Sonia Rolley;
Writing by Portia Crowe; Editing by Anait Miridzhanian, Elaine
Hardcastle)
 ((Portia.Crowe@thomsonreuters.com; +221785893440;))