Gecamines, the state-owned company of Democratic Republic of Congo (DRC), has drawn up ambitious plans to reinvigorate its role in the country’s mining industry. The firm is $1.6bn in debt and its role was greatly diminished during and following the long Congolese civil war. However, chairman Albert Yuma Mulimbi is now banking on Chinese investment to re-establish it as a mine operator in its own right.
Although the DRC has a wide range of mining resources, it is the copper industry that generates most income. It has overtaken Zambia as Africa’s biggest copper producer, although the two countries continue to vie for top spot, and is the fifth biggest producer in the world, with output of 990,000 tonnes in 2015. Private firms such as Glencore and Freeport-McMoRan dominate the industry.
Gecamines produced just 17,000 tonnes in 2015 but expects this to have increased to 24,000 tonnes in 2016, with a forecast of 50,000 tonnes for 2017. Total investment of $717m over five years is intended to boost annual output to 100,000 tonnes by 2020. This is still just a tenth of the parastatal’s output in 1986 but represents at least a partial recovery after years of being sidelined. The increase is being achieved by investing in new machinery at Gecamines’ Kambove mine.
The firm was in talks with China Nonferrous Metal Mining Group over the development of a mining joint venture and it is now confident that the venture can proceed. Gecamines is unhappy with the terms of existing joint ventures, in which it has minority stakes. However, critics, including NGO Global Witness, argue that the firm needs to operate in a more transparent manner if it is to play a full role in the development of the sector.
Political stability at risk
Alongside all other stakeholders in the country, mining firms will be watching political developments in Kinshasa with great interest. President Joseph Kabila’s efforts to stay in power beyond the current constitutional limit of 19 December met with widespread opposition. Clashes between the security forces and protestors left dozens dead and it appeared that the country could slide back into civil war.
The political, economic and security situation in the country remains fragile and the progress has been made on all three counts over the past 15 years could be undone by a political crisis. The terms of the constitution have already been broken, as a presidential election was supposed to have been held by 27 November.
An agreement was struck in December, whereby Kabila would stay in power until the end of 2017 when the election would finally be held. Under the terms of the deal, Kabila is barred from trying to change the constitution to allow him to stand for a third term and extend his presidency, which is already into its 16th year. Yet the deal lacks two important signatures: that of Kabila himself and his main political rival, Etienne Tshisekedi, although their respective negotiators have said that they will abide by it.
Political machinations in Kinshasa are a very long way from the country’s main mining centres, including Katanga, and in any case, central government has limited influence over such distant provinces. Yet a political collapse could trigger renewed local, regional and even international conflicts that would deter mine investment and particularly the construction of the transport infrastructure required to get mining commodities out of the country. The railway from Katanga through Angola to the Port of Lobito is being rebuilt.
A mine executive who has worked in the DRC, but who preferred not to be named, said that security is not just important in relation to keeping the mines operating but in keeping mines within the formal economy. Many armed groups seized territory inside the DRC during the civil war in order to take control of particular mines. Any step in this direction could deter Chinese investment.