Interview with Albert Yuma, President of Gécamines

With Gécamines virtually bankrupt, the government of Joseph Kabila has embarked on a major project to restore the company to its former glory and to buy back shares from its joint-venture partners. The man chosen to lead this task is Albert Yuma, who was appointed president of the company two years ago.

The unassuming, softly spoken businessman certainly has all the credentials required for this enormous turnaround. Yuma was born in a village called Kongolo in Katanga Province. At independence, following the harsh rule of Belgium, the Congo had only some 30 university graduates. One of these was Yuma’s father. When he was nine years old, Albert Yuma and his sister were sent to study in Belgium. In his late twenties he returned to DRC, where he worked for a Belgian company called Texaf. At the time the company was into textiles, real estate and public works.

Yuma bought the textiles arm of the company, which he renamed TEXICO and which he still runs to this day. Texaf still operates in DRC and is primarily an investment company dealing with real estate. The highly respected businessman is head of several organisations. He is chair of the Business Association in DRC, the Audit Committee of the Central Bank of DRC, the Francophone Chamber of Commerce and a board member of the International Labour Organisation in Geneva and its vice-president for Africa. African Business editor Anver Versi met Albert Yuma in New York.

Q | You have a number of high-level responsibilities. What do you spend most of your time on?
I’m focusing most of on my time on mining. Two years ago President Kabila decided to appoint me chairman (or president) of Gécamines to change the way the company was run, so that it had a private sector mentality, and to ensure it had the proper governance and management structure. Really, the idea is to transform Gécamines so that it became a world-class mining company and to restore it to its previous glory.

Q | What was the state of the company when you took over?
The company was near bankruptcy. We had a huge labour force, almost 11,000 people, we were working with old machines – in some cases, equipment which was 40 years old, and we were producing less than 10,000 tons per annum. We were heading towards bankruptcy. It is fair to say that less than 10 years ago, Gécamines was literally at a standstill. So, to try and kick-start the mining sector, the government decided to let foreign companies manage the assets of Gécamines as joint ventures (JVs) with Gécamines as minority partner. When I came to Gécamines and we looked at this structure, we agreed that this was not the right strategy, as it was not providing Gécamines with sufficient funds to enable the company to reinvest and grow.

So we decided that, going forward, we would no longer enter into partnerships where the group would be a minority shareholder. And from there we are starting to buy back assets. Today we have managed to buy back four major assets – Deziwa, Kalumines, Mutoshi and Cmsk. This was not a straightforward process and was received with hostility by some partners. We put in place a new strategy: going forward, we ourselves would develop the assets, increase efficiency partly by reducing the workforce, and invest in new equipment, slowly decommissioning the older machines. We decided to conduct an audit on all the joint ventures that had been previously signed, to ensure that Gécamines is getting a fair share of the bargain. It has not been easy, and it caused its fair share of disgruntlement but that is the strategy we agreed on, and which formed the basis of the business plan I presented to the Mining Indaba last year. The strategy was to prospect and auditing mineral reserves, modernise and buy new equipment.

Q | How much do you estimate the assets you recovered are worth?
They form the biggest copper reserves in the DRC, at some 8m tonnes. These are now owned by Gécamines and will be developed by Gécamines.

Q | And at absolute peak production how much would you be producing?
Our target is that by 2016 we’ll reach 100,000 tons per year and we will double that two years later in 2018 to 200,000 tons per year. That’s the projection and that’s the plan.

Q | And the partners…?
Without any partner, these assets will be fully run by Gécamines.

Q | Which of your existing partners would you say are the biggest or the most important?
We have maintained, in many cases, the JV structure and we currently have nine joint ventures, which are producing, and another dozen which are at the prospecting stage. The three biggest include Tenke Fungurume with an American company Freeport McMorn (where we are producing 200,000 tons now), KCC with Glencore and we have that famous deal, you may have heard about Sicomines with the Chinese, which will start production in 2016 with a target of 200,000 tons a year.

Q | And this mine, Deziwa, you say is the biggest at the moment?
This mine is biggest for the moment, in terms of certified reserves (almost 5m tons of copper), more than Tenke Fungurume, where Gécamines is minority shareholder. With the new asset buyback, we’ll develop it ourselves without any partner. We are currently working with Renaissance Capital in London looking to raise $1.3bn for our investments.

Q | In what form, are they bonds or a direct loan?
A direct loan guaranteed by a 100% subsidiary company of Gécamines, which will hold all our minority share in the JV.

Q | During the period when Gécamines’ assets were majority held by other parties, roughly how much did the country lose in terms of revenues?
I don’t exactly know because one must be careful when talking about country laws. All those agreements were made under the mining code, with the full agreement of the government. So there is no real cause for complaint because it was done under the mining code. Now we are in the process of reviewing this mining code, which I think was too favourable for the investor. Now we have to revise it, in order to give the state what it deserve, the population what it deserves and even Gécamines what it deserves – because under the mining code, Gécamines was a minority investor. I’m not happy with the previous arrangements but I can’t complain because there was an agreement signed between two parties.

Q | And what about beneficiation; is there now a law about beneficiation in the country itself?
Definitely there is a law and I totally agree with that. We have to stop exporting minerals in their raw form. We have to transform them to the final step. That’s why there is a law obliging all investors to build smelters and not to sell raw commodities. We have to keep most of added value in the country.

Q | At the moment who operates the smelters; is it the mining companies?
Yes, it’s the mining companies of course. However, there are also several small independents.

Q | What about other minerals in addition to copper and cobalt?
The DRC is also involved in diamond and gold production, but really the diamond business is very slow. The sector where we are seeing an increase in activity is the gold sector. We already have large multinationals, such as Banro, a Canadian company, Randgold and AngloGold Ashanti operating in the country. I think the gold business will become one of the most prominent businesses in DRC in the future.

Q | But was Gécamines involved in any of the gold production?
No, Gécamines is focused on copper and cobalt, despite the fact we do have concessions where there is gold, but we are not producing gold, not yet.

Q | At its peak, how much would you have valued Gécamines at?
You know, in the past, Gécamines used to be the biggest mining company in the world, we were producing almost 500,000 tons per year. Gécamines was the biggest company with a turnover then of $1bn or $1.5bn. But, given world commodity prices, if we reach our target of 200,000 tons in 2018, our turnover will exceed that of Gécamines at its peak.

Q | You are the chairman of Gécamines but also the chairman of the Congolese private sector association. Are there any trends which have caught your attention?
I’m really interested in focusing on the agro industry, because we used to be one of the largest producers of cotton in Africa, and our textile industry used to have everything, cotton, farms, spinning, weaving and so on, so now everything stopped and today we are importing our raw material from China; it’s not normal. Congo is almost entirely a land of agriculture. If I remember well when I was studying, the only country in the world to have more arable agricultural land than DRC was Argentina. So there is an opportunity to become a world leader in agri-business. I’m really pushing the government to change the law to facilitate investment in this area. Mining is a good business, but once you have mined out a pit there’s nothing more to gain from it whilst agriculture will continue
to grow.

Q | Do you also see food as an important part of agri-business?
It’s a critical part. If you can’t feed your population, you don’t have peace, you don’t have stability. So for me, that’s the first thing. It’s not just a matter of bringing investors into the agricultural and agribusiness sector. The first priority is food.
In DRC, we are currently importing 80% of our food needs, including fish. That is not normal. Our foreign reserves are spent importing food; it’s simply not normal for this kind of country. The eastern part of Congo can supply food for all of Africa.

Q | What is the situation with power?
That is where there is a bottleneck. Only recently, we were discussing the Inga dam but that project is really for the long term so we are pushing people to invest in smaller hydro projects to meet our power needs.
For a mining company like Gécamines, if we want to expand, we will need to build the power infrastructure in the country. We definitely need to open the sector to foreign and private investors. I’m here in the US to talk with partners who are willing to invest in the power sector.

Q | As chair of the DRC’s private sector association, what is your assessment of the country’s other industries?
Industry, as a sector, is very weak, mainly due to the war. One of our challenges is to rebuild this industrial base. For example, the tobacco industry and brewing are cases in point. In the past, we used to have Ford and Renault plants but all those have stopped. We used to have Unilever. All those are now gone now so we have to bring them back. We have a population of some 70m, so the DRC is a huge internal market. That’s why I was saying that for my textile company I don’t have a need to export. Servicing the internal market at the moment is already substantial.

Q | What is the state of infrastructure at the moment?
Infrastructure is really improving, I would say that is one of the major achievements of the government and the leadership of President Laurent Kabila. That’s very good for business. There is a €6bn infrastructure investment programme aimed at roads and railways.

Q | Is this for greenfield projects?
For both, for rehabilitation and for new infrastructure.

Q | What is the current security situation?
It’s also one of the challenges but I can say the situation is seriously improving – except the small part at the border with Rwanda. Over the last 10 years, investments only in the mining sector amounted to $15bn, and that is because of an environment of peace.

Q | If you can put a figure on it, how much investment do you need to achieve everything that you’ve talked about, and what is the time frame involved?
You know DRC is a big country – we are not talking about $1bn or $2bn, we are talking about hundreds of billions of US dollars of investment needed for the country. The DRC is big enough to require its own Marshall Plan. President Kabila has said that in the next 15 years, Congo must become an emerging economy like Brazil and China.
We have the resources, we have the scale, we have the people and we have a political vision which is very clear: we just need the investments to realise this vision, and not only foreign investment but also local investors. We are first pushing local Congolese businessmen to invest in the country and in the future.