LUBUMBASHI, DR Congo, June 18, 2018 (BSS/AFP) – Feasting on a global
demand for cobalt and copper, the mining industry in the Democratic Republic
of Congo is flourishing — but two clouds are spoiling its sunlit future.
First is the lack of power, which is holding back the development of the
minerals processing sector and crimping the country’s ability to reap higher
profits from the boom.
DR Congo is Africa’s largest copper producer, and while it is the world’s
leading source of cobalt, miners can only export concentrate forms of cobalt
at 60-70 percent of the market price because of the energy problem.
“We have an estimated potential of 100,000 MW/year but only produce 3,000
MW/year,” said Michael Shengo chief of staff for the provincial mining
minister for Haut-Katanga earlier this week as he opened DRC Mining Week, an
annual conference in the southeastern town of Lubumbashi.
A massive hydropower project on the River Congo, Inga 3, has the potential
to power the entire country and even the continent, but it has been
frequently delayed.
Now the project is hopefully back on track thanks to a joint bid by
Spanish and Chinese companies: China Three Gorges Corp and Actividades de
Construccion y Servicios SA.
Bruno Kapandji, director of the Agency for the Development and Promotion
of the Grand Inga Project announced the project’s relaunch in front of miners
and investors at the conference.
“Our objective is to start the Inga project this year. It could take five
to seven years, maybe up to eleven years,” said Kapandji.
– Poor global ranking –
Another challenge for the mining industry, which represents 20 to 25
percent of the country’s GDP, is a new fiscal law that raises taxes.
Seven mining companies, known locally as “the G7”, have argued the new
code violates terms of the previous version, which provided a 10-year
stability clause after any fiscal change, and some of them could be preparing
for legal action as a result.
One of its most vocal members, Mark Bristow, CEO of gold mining company
Randgold Resources, had a message of warning for other industries operating
in the country.
“Attracting investment and developing a mining industry is about trust,”
said Bristow, “and I see the government is making guarantees to other
industries (solar, electricity), and what do they think when they see our
guarantees are being taken away?”
Discussing and signing deals is all well and good but implementing and
developing them remains an immense challenge.
The World Bank has ranked DR Congo 182nd country out of 190 for doing
business, and the French credit insurer Coface rates it at the same level as
Libya, Venezuela, Afghanistan and Syria due in most part to the political
uncertainties, corruption and poor governance”.
– Gambling and adapting –
There are glimmers of hope in other sectors in the troubled country,
currently in the grips of an Ebola epidemic and a bloody internal conflict.
In the capital Kinshasa, French sports retailer Decathlon just opened its
first store — a gamble in a city of 10 million where many are struggling to
pay for essentials such as food and shelter.
Richard Kalinda, a Franco-Congolese who once said said his dream was
opening a shop in his home country, said: “I have to reach 0.1 percent of the
population. We are marketing for the middle class, people who have a regular
income.”
However, Kalinda added they will have to adapt their prices to the
country’s average salary.
At the 5th edition of the “French week” organised by the Franco-Congolese
Chamber of Commerce, the theme set the tone for those looking to invest in
the country: “securing business, a challenge and a necessity”.
For the chamber of commerce, opening and bringing international capital in
DR Congo requires being very well informed.
“Companies often have to confront administrative and procedural challenges
that could be called fiscal harassment,” said the French ambassador to DR
Congo, Alain Remy in an interview with Mining and Business magazine.
Debt-ridden Gecamines, the state-mining company, announced this week they
struck a recapitalisation deal with their Anglo-Swiss partner Glencore who
agreed on a $150 million payment.
Gecamines had started legal proceedings to dissolve their Kamoto Copper
Mine, but Glencore has reportedly agreed to write off $5.6 billion of debt to
safeguard their joint venture.
“I am convinced that we are entering a period for the mining industry that
will be profitable for all,” said Yuma, “but only if the relation between
foreign investors and the DRC is more equitable. The new mining code will
make that possible, and I call on everyone to conform to it.”