AMN - DRC mining code to remain unchanged - comment by Yolanda Torrisi

The Democratic Republic of Congo has dropped plans to change the country’s mining code. Last month at the Mining Indaba held in Cape Town, Mines Minister Martin Kabwelulu told attendees that the mining code which is currently in place would stay in place. He assured investors thinking of investing in the DRC that they could do so based on the current mining code.

Last year the DRC recorded its first drop in copper production in six years. This year is expected to be an equally difficult year as commodity prices continue to remain low.

Output last year dropped 3.3% to 995,805 tonnes from 1.0 million tonnes the previous year. This is the first time production has recorded a fall since the global economic crisis downturn in 2009.

The biggest drop was in the last quarter when production slumped 12% year on year due to the suspension of some production at Glencore’s Katanga mine.

Katanga is one of the largest mines in the DRC producing 113,674 tonnes of copper in the first nine months of 2015 and is not expected to reopen until mid-2017.

Mining in the DRC accounts for 20% of gross domestic product. Copper and cobalt accounted for 79% of the country’s exports in the first half of last year.

There is a belief that copper prices are expected to hit their lowest average in more than a decade this year as global supply outstrips demand.

The DRC has had to scale back its 2015 growth estimate to 7.7% from 10% because of continuing low metal prices. The suspension of Katanga Mining operations for 18 months will mean more than $200 million in lost tax revenue.

Adding to the difficulties in the DRC, the copper-producing south east corner of the DRC has a significant shortfall in electricity, receiving only half the electricity it requires, despite government efforts to rectify this.

There are some signs of optimism with Ivanhoe Mines Kamoa project, which has been touted to be the world’s largest untouched high-grade copper discovery, is expected to come online in 2018.

Other signs of optimism have come from Randgold Resources Kibali mine which contributed to the DRC’s 25,516kg gold production.

Gold production is expected to continue to rise with Randgold, AngloGold Ashanti and Banro Corporation ramping up production at mines they have opened in the last five years.

Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the African continent. Contact:yolanda@yolandatorrisi.com