The Democratic Republic of Congo (DRC) is actively seeking new buyers for gold produced in its eastern territories. This move comes after UAE-based Primera Group withdrew from a contract that had granted the company exclusive rights to purchase and sell gold mined in this region.
The Exclusive Contract with Primera Group
In a joint venture established with the Congolese government, Primera Group was given the sole authority to trade gold sourced from small-scale, or artisanal, miners in eastern Congo. The arrangement, signed in 2022, was intended to regulate the artisanal mining sector, which had been plagued by smuggling activities that deprived the government of substantial tax revenue and fueled conflict in the region.
Challenges and Withdrawal
Primera Gold, now wholly government-owned, recently faced significant challenges in its operations. According to a UN Security Council Report released in June, the company struggled to compete with illicit traders who smuggle gold to neighboring countries like Burundi, Uganda, and Rwanda, where they offer higher prices. This competition has hampered Primera’s ability to maintain its gold purchasing activities in eastern Congo.
Additionally, Primera Group’s corporate license in the UAE expired in March 2024, further complicating its business operations. As a result, the company’s gold exports dropped dramatically, from an average of 500 kilograms per month between May and October 2023 to just 164 kilograms per month by March 2024.
Government’s Response and Future Prospects
In response to Primera’s withdrawal, Joseph Kazibaziba, the director-general of Primera Gold, stated that the company is now open to new investors and buyers, including those from Europe. He acknowledged previous criticisms of the exclusive nature of their partnership and expressed a willingness to diversify their buyer base.
The situation has prompted calls for greater transparency. The watchdog group ‘Le Congo n’est pas à vendre’ (Congo is not for sale), which consists of 14 Congolese and international organizations, has urged the government to clarify the reasons behind Primera’s exit from the contract. They have also called for an investigation into the matter to ensure transparency and accountability in the country’s mining sector.
Decline in Gold Exports
Primera Gold’s difficulties are reflected in the sharp decline in its gold exports, which fell to 164 kilograms per month by March 2024, a significant decrease from the 500 kilograms per month recorded between May and October 2023. This decline underscores the challenges faced by the company in maintaining its operations in the face of illicit competition and regulatory issues.
The loss of a formal and regulated buyer like Primera Group could lead to a resurgence in smuggling, resulting in substantial losses in tax revenue for the government and potentially increased funding for armed groups in the region.
The government will need to address these issues to attract responsible buyers and ensure that the country’s mineral wealth benefits its people rather than contributing to ongoing instability.
