By Michael J. Kavanagh
March 28 (Bloomberg) — Anhui Foreign Economic Construction Group of China and the Democratic Republic of Congo created a joint venture to mine diamonds in Eastern Kasai province and plan to take the company public.
The 50-50 venture between Anhui and the central African country may produce 6 million carats a year by 2016, according to documents published on the Mines Ministry’s website
yesterday. Anhui, based in Hefei, will pay $4.2 million for its half, plus a signing bonus of as much as $61 million, and invest an estimated $100 million in infrastructure, the documents show.
Congolese Mines Minister Martin Kabwelulu didn’t respond to a mobile-phone message requesting comment. A phone call to Anhui Foreign Economic Construction Group’s sales office went unanswered today, while a receptionist at the company’s headquarters said no one was immediately available to comment.
Congo was the world’s second-largest producer of natural industrial diamonds and accounted for about 5.5 percent of gemstone production in 2012, according to the U.S. Geological Survey. Last year, the country produced about 20 million carats, down from 29 million carats in 2006, according to central bank figures. A carat is a fifth of a gram.
De Beers, the world’s largest diamond miner, produced 27.9 million carats last year Anhui is also partner with the Zimbabwean government in Anjin Investments Ltd., the biggest company operating in Zimbabwe’s Marange diamond fields. New York-based Human Rights Watch and Africa Partnership Canada have said informal diggers have been killed, and diamond money from the venture has gone to a military loyal to President Robert Mugabe’s ruling Zimbabwe African National Union-Patriotic Front.
The new Congolese joint venture, known as Société Anhui-Congo d’Investissement Minier Sprl, or SACIM, has two diamond-exploration permits in Tshibwe, about 50 kilometers (31 miles)from Mbuji-Mayi, the country’s main diamond trading center. The company estimates total reserves of 158 million carats.
Congo will receive $9.15 million of the signing bonus up front, and another $10.1 million at production. Anhui will progressively pay the rest after the company is listed on an unspecified stock exchange “and diamonds are sold,” the contract says, without providing more details.
As part of its investment, Anhui will construct a 4.6-megawatt hydropower plant near Tshibwe and a new building for Congo’s diamond regulator at the N’Djili airport in Kinshasa, the national capital.
Anhui also agreed to help Congo secure a preferential loan from the Chinese government to build a 15-megawatt hydroelectric plant at Tubi Tubidi and a road from the plant to Mbuji-Mayi.
The venture replaces state-controlled Société Congolaise d’Investissement Minier Sprl and will take on SCIM’s $7.7 million debts.