Rebounding mining sector defies DRC’s political woes

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The Democratic Republic of Congo (DRC) is no stranger to civil strife. For decades Africa’s second largest country (since the partitioning of Sudan) has been beset by political woes. The mining industry, on the other hand, looks to be in promising health, as evidenced by strong support given to two international conferences held in the country this month.

Such has been the strife – from the era of the military dictator, Mobutu Sese Seko, in the 1960s to the current administration of Joseph Kabila – that many of the country’s enormous opportunities have largely been overlooked, but that is not the case with mining. The sector, among the most defiant in the economy, has withstood the many crises and emerged as the mainstay of the country’s economy.

Despite recent problems fuelled by allegations that Kabila plans to tamper with the constitution to remain in power at the elections next year, high levels of confidence in and commitment to the mining sector were on display at this week’s Katanga Mining Week in Lubumbashi and last week’s 11th Infrastructure Partnerships for African Development DRC Mining and Infrastructure Indaba in Kinshasa, which both enjoyed solid institutional and industry support. Nicole Smith, event director for the mining portfolio at Spintelligent, the Cape Town-based company that organised both conferences, said the support seen at these two events was evidence of how committed the operators were to finding solutions and developing the industry in the country, even at such a low point in the commodity prices cycle. DRC is the world’s largest producer of cobalt ore, a major producer of copper and the second largest diamond-producing nation.

The industry is set for huge growth too. Ivanhoe Mines, the Canadian company with significant interests in the DRC’s mining sector, is building a large, modern copper mine at Kamoa, where Ivanhoe says the copper deposit is one of the largest ever exploited anywhere in the world. Operations at Kamoa should begin at the end of 2018, with expected first stage production estimated to be equivalent to one third of the copper produced by all mining companies in the DRC.

The second phase is expected to more than double that. Commenting on current low commodities prices, Ivanhoe Mines DRC’s managing director Louis Watum, said: “There will always be mining cycles, resulting in highs and lows … now is the time to invest and to look for ways to improve our respective operational efficiencies in order to stay competitive.” Watum was also upbeat about the industry’s prospects for driving the country’s economic growth. While Spintelligent’s Smith added it could very well go further than that: “DRC could transform the region’s socio-economic landscape.”

Such is the determination of some players in the industry that they are investing in infrastructure that one might argue is the obligation of government. Tiger Resources, for example, is investing $33 million to improve the electricity network and carry out an energy efficiency project amid frequent power cuts. “Everyone wins with this: ordinary households get better power and light, there will be fewer power cuts and there will be more power available for SNEL [the national power utility] to sell,” said Charles Carron Brown, chief operations officer of Tiger Resources’ Kipoi Mine, a copper mine in the country’s Katanga Province. “There will be more power available for the mining industry and in the end the government will collect more taxes since the operating costs of all the miners will be reduced. That is seven wins. Not just the normal win-win.”

The recent conflict in the country, which began in 1996, dramatically reduced national output and government revenue as well as increasing external debt. Prevailing sentiment, however, is that the mining industry is on course reach its full potential. “I remain convinced that developing profitable mining projects remains a singularly important way to propel our country into the realm of emerging economies,” said an upbeat Watum.

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