Gecamines copper mine in the Democratic Republic of Congo. Picture: REUTERS/JONNY HOGG
Gecamines copper mine in the Democratic Republic of Congo. Picture: REUTERS/JONNY HOGG

Lubumbashi — The flourishing mining industry in the Democratic Republic of Congo is being hobbled by poor infrastructure and a tax hike when global demand for cobalt and copper is high.

The lack of power is holding back the development of the minerals processing sector and crimping Congo’s ability to reap higher profits from the boom.

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

"We have … potential of 100,000 MW/year but only produce 3,000 MW/year," said Michael Shengo, of the provincial mining minister for Haut-Katanga, at the opening of the Mining Week annual conference in Lubumbashi recently.

Hydropower project

A massive hydropower project on the River Congo, Inga 3, has potential to power the entire country and even the continent, but has been frequently delayed.

Now the project is hopefully back on track, thanks to a joint bid by Spanish and Chinese companies, Actividades de Construccion y Servicios SA and China Three Gorges.

Bruno Kapandji, director of the Agency for the Development and Promotion of the Grand Inga Project, announced the project’s relaunch 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," Kapandji said.

Another challenge for the mining industry, which represents 20 to 25% 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 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[s] … 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 the Congo the 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.

"Companies often have to confront administrative and procedural challenges that could be called fiscal harassment," the French ambassador to the Congo, Alain Remy said.

But state owned Gecamines chairman Albert Yuma says: "I am convinced that we are entering a period for the mining industry that will be profitable for all, 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."

AFP