The Democratic Republic of Congo, is anything but the law abiding democratic country its name suggests. The DRC has often slipped into chaos since independence nearly 50 years ago and even when it has managed to elect a democratic regime it has all too rapidly slipped into blatant corruption and administrative incompetence. (Not that the US and Europe didn’t play a role in manipulating the choice of regimes too but that’s another story) So it should be no surprise that the DRC state mining company Gecamines is true to form reported as applying strong arm tactics to those miners that have invested most (and hence have most to lose) in developing the copper, cobalt and other mineral deposits of the south and east of the country.
To be fair the DRC is, in terms of road, rail, education, medical and just about every other form of infrastructure, a basket case. Fifty years of incompetence, tribal strife and corruption have left the country on its knees. Without UN aid the population would be in dire straits and the country in default even though (or may be because) it is sitting on some of the wealthiest mineral deposits in the world. The government has been seduced by Chinese offers to build roads and railways, investments they have to some extent already started in return for handing over the rights to mine rich mineral reserves. Reserves that were already the legal property of western registered mining companies such as Katanga Mining. Legal still doesn’t stand for much in the DRC even when dealing with the government (supposedly Katanga will be allocated alternative mining rights of equal worth between now and 2015, yeah right).
At the same time, the government is leaning on majors like Freeport-McMoRan, holders of 58.8% of Tenke Fungurume a copper and cobalt mine, threatening them with closure inside six months after the firm has just completed the first phase to produce 115,000tpa copper (cathodes) and 8,000tpa cobalt (metal contained as a mixed hydroxide) at a cost of $ 1.8bn. Eventually the project is to ramp up to over 400,000tpa of copper and 15-17,000tpa of cobalt. Other miners like First Quantum who have recently invested $553m in the Kolwezi tailings operation have also been threatened with a reappraisal of their mining agreement ” for which read appropriation of their rights and/or an increase in the government’s take.
These issues should be of concern to the wider metals consuming community. The DRC is rich in minerals, indeed one of the richest regions of mineral deposits anywhere in the world. The successful and long-term development of these resources would be of immense benefit to the people of the DRC but also to the stability of metal prices around the world. Tenke Fungurume alone could contribute up to 17,000tpa of cobalt into a market that produced around 60,000 tons last year according to the Cobalt Development Institute. In a market that has grown at something like 8% per annum over the last ten years, a major new low cost source like this offers stability and continuity to pricing, but only if it is allowed to continue to operate and invest in a secure environment.
–Stuart Burns
