DR Congo’s mining industry hobbled by poor infrastructure

Workers stand on a muddy cliff as they work at a gold mine. (AFP)
Updated 18 June 2018
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DR Congo’s mining industry hobbled by poor infrastructure

  • DR Congo is Africa’s largest copper producer, and while it is the world’s leading source of cobalt, miners can only export concentrated forms of cobalt at 60-70 percent of the market price because of the energy problem.
  • 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.

LUBUMBASHI: Feasting on a global demand for cobalt and copper, the mining industry in the Democratic Republic of Congo is flourishing — but two clouds loom over its sunny outlook.

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 concentrated 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 looks to be 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 11 years,” said Kapandji.

Another challenge for the mining industry, which represents 20 to 25 percent of the country’s GDP, is a new fiscal law to raise 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. Some of the companies 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 warning for other industries operating in the country. “Attracting investment and developing a mining industry is about trust,” he said, “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 one thing, 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 to the political uncertainties, corruption and poor governance.

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 has 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 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” organized 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 it struck a recapitalization deal with its Anglo-Swiss partner Glencore who agreed on a $150 million payment.

Gecamines had started legal proceedings to dissolve the Kamoto Copper Mine, but Glencore has
reportedly agreed to write off the $5.6 billion debt to safeguard the joint venture.

“We are entering a period for the mining industry that will be profitable for all,” said Yuma, “but only if relations
between foreign investors and the DRC are more equitable. The new code will make that possible, and I call on everyone to conform to it.”


Oil prices climb as Saudi capacity cushions impact

Updated 20 September 2019

Oil prices climb as Saudi capacity cushions impact

  • Kingdom pledges return to capacity by end of November as Kuwait strengthens security for oil sector

LONDON: Oil prices gained on Thursday, supported by supply risks as the market assesses the fallout from last weekend’s drone attacks on Saudi oil
infrastructure.

Brent crude futures gained $1.78 to $63.80 a barrel, while US West Texas Intermediate crude was up $1.28 at $58.40 a barrel.

The attacks knocked out around half of Saudi Arabia’s crude production and severely limited the country’s spare capacity, a cushion for oil markets in any unplanned outage.

“Global available spare capacity is extremely low at present following the weekend attacks, leaving little room for additional outages, which tends to be price supportive,” UBS oil analyst Giovanni Staunovo said.

Earlier this week Saudi Arabia set out a timeline for a resumption of full operations, saying it had restored supplies to customers at levels prior to the attacks by drawing from its oil inventories.

HIGHLIGHTS

• US to impose more sanctions on Iran.

• Cushing stocks at lowest since October, 2018.

• Global excess capacity at low level.

The Kingdom said it would restore its lost production by the end of this month, and bring its output capacity back to 12 million barrels per day by the end of November.

“These plans suggest Saudi Arabia will have no spare capacity for at least the next two and a half months,” consultancy Energy Aspects said.

Saudi Arabia, the world’s leading oil exporter, has said the crippling attack on its oil sites was “unquestionably sponsored” by Iran.

US President Donald Trump said there were many options short of war with Iran and added that he had ordered the US Treasury to “substantially increase sanctions” on Tehran. Iran has denied involvement in the strikes.

Iran warned President Trump against being dragged into all-out war in the Middle East.

US Secretary of State Mike Pompeo has described the weekend strike as an act of war and has been discussing possible retaliation with Saudi Arabia and other Gulf allies.

Kuwait’s oil sector has raised its security to the highest level as a precaution, a Kuwaiti official said.

Separately, weekly data from the Energy Information Administration on US oil inventories provided a mixed snapshot.

Stockpiles of crude in the US the world’s largest oil producer, rose by 1.1 million barrels last week against analysts’ expectations for a drop of 2.5 million barrels.

However, stocks at Cushing, Oklahoma, the delivery point for benchmark futures, fell to their lowest since October 2018.