(Bloomberg) -- Democratic Republic of Congo is finalizing a deal to take full control of a gold-export joint venture from its Emirati partner, after shipments slumped.

Congo started Primera Gold DRC SA in January 2023 with Abu Dhabi-registered Primera Group Ltd. in a bid to crack down on the gold smuggling that fuels conflicts in the country’s eastern provinces. The partnership sold 5 tons of hand-mined gold, worth about $300 million, in its first year of operation, but sales have since plunged despite more ambitious goals for 2024.

United Nations experts said the preferential terms of Primera Gold’s contract – including paying a 0.25% tax versus 6% for rivals – gave it a “de facto monopoly” on legal exports of so-called artisanal gold. But that wasn’t enough to offset the higher prices offered on the black market, while banking regulations limited daily cash transactions with traders who prefer working with hard currency, the company previously told Bloomberg.

The sale will mark the end of a controversial chapter in Congo’s relationship with the United Arab Emirates, which is using its oil and gas wealth to expand its influence in Africa. Besides backing mining investments through closely held Primera Group, the UAE also provided equipment and training to Congo’s army, which is fighting dozens of militias in the mineral-rich east.

“Congo will purchase all of the shares that belong to Primera Group at a price that will be set following ongoing discussions,” Primera Gold said in a response to questions sent through a spokesperson for Congo’s President, Felix Tshisekedi. 

The government will continue to manage the company, while Primera Group will develop a separate venture to refine tin, tantalum and tungsten from the region, it said. The two parties originally signed a 25-year contract for the gold partnership.

Primera Group, which owns 55% of Primera Gold, did not immediately respond to an email requesting comment. 

The UAE’s foreign affairs ministry didn’t respond to a request for comment. The Gulf country is now Congo’s second-largest bilateral creditor after China, according to data from the central African nation’s debt office.  

For nearly three decades, smuggling from eastern Congo has helped fund local and regional conflicts. Congo’s government says much of the trafficking goes through neighboring Rwanda, Uganda, and Burundi, which have exported billions of dollars worth of gold in recent years despite having few mines of their own. The countries deny they’re shipping stolen gold.

In a January report, UN experts said Primera Gold’s operations “did not significantly curb gold smuggling” and warned about a “lack of transparency” around the provenance of some metal acquired by the firm. The company rejected that allegation.

Despite its tax benefits, the firm’s monthly shipments to an Abu Dhabi-based refinery linked to Primera Group have slumped over 50% since November, according to company data seen by Bloomberg.

Now, Primera Group will turn toward eastern Congo’s tungsten, tin and tantalum, which are widely used in portable electronics. The company still plans to construct a smelter for the metals “according to the demands of profitability,” said Primera Gold’s management via Congo’s presidency.

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