AMN - DRC will not change mining code - comment by Yolanda Torrisi

Opposition from mining companies has helped convince the Democratic Republic of Congo Mines Minister Martin Kabwelulu to drop plans to change the mining code. The DRC is Africa’s largest copper producer.

Earlier this year at the Investing in Mining Indaba conference held in Cape Town, the minister said: “The mining code, which is currently in place, will stay in place. You don’t have to think about modifying your business plan. Those who are thinking of investing can do so based on this code."

In 2015, copper production dropped for the first time in six years and 2016 is not looking very strong either as low commodity prices continue to dog the industry.

Last year output dropped 3.3% in DRC to 995,805 tonnes from 1.03 million tonnes in 2014; the first time production fell since the global economic downturn in 2009.

The sharpest fall was in the fourth quarter when production slumped 12% year on year, in part due to the suspension of some production at miner and trader Glencore’s Katanga Mining unit. The mine, one of the largest in Congo, producing 113,674 tonnes of copper in the first nine months of 2015, is not expected to reopen until mid next year.

Congo’s economy is highly dependent on the mining sector, which accounts for about 20% of gross domestic product (GDP). Copper and cobalt alone accounted for 79% of the country’s exports in the first half of 2015.

In 2015, benchmark copper fell 25%. Indeed, copper prices were expected to hit their lowest average in more than a decade this year as global supply outran demand.

The government scaled back its 2015 growth estimate to 7.7% from more than 10% because of low metals prices. It has said Katanga Mining’s 18-month suspension would cost it more than $200 million in tax revenues this year.

The government expects growth to rebound to 9% this year while the International Monetary Fund (IMF) predicts 7.3% growth.

Electricity availability is a major concern for the country with the south-east receiving only about half of the electricity it needs. The government is backing a series of projects to boost supply but the DRC Chamber of Mines says "inadequate and highly non-transparent management" of the sector has led to "little progress" in 2015.

The chamber’s report did note a few green shoots of optimism, with several new mines starting commercial production in 2015 and several major projects planned for development in the near term.  

During 2015 gold production rose 30% to an estimated 25,516kg, partly because of stronger-than-expected production at Randgold Resources’ Kibali mine.

Industrial gold production stood at near zero in 2011. As Randgold, AngloGold Ashanti and Banro Corporation continue to ramp up output at large mines they have opened in the past five years, gold production will continue to rise.

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