Congo set to overtake US as world's no 4 copper producer
Metal News - Published on Thu, 22 Mar 2018
Mining com reported that likes of Glencore, Randgold, Zijin, China Moly and Ivanhoe appear to have been blindsided by Congo’s determination to push through a new mining code that substantially increases the cost of doing business in the central African nation. Lobbying of President Joseph Kabila (who insisted that the CEOs personally show up in Kinshasa for talks) that lasted six hours ended with no concessions other than that the miners’ concerns “will be taken into account through a constructive dialogue” after the law is promulgated.
Those negotiations kick off, but the mining companies’ hopes of more favourable case by case “transitional arrangements” or significant concessions in the detailed regulations (which need to be produced within 90 days) also seems faint.
Glencore et al may have overestimated the strength of their position with suggestions that the new law will “cause the certain death of a young industry" or that international arbitration was a viable option.
The industry may be young, but the DRC is already too important for global copper and of course cobalt supply that companies could simply up sticks. Glencore CEO Mr Ivan Glasenberg told a commodities conference, the Swiss miner has invested USD 7 billion in the DRC since the investor-friendly 2002 mining law came into effect.
Today the country supplies more than 60% of the world’s cobalt and that share will only grow over the medium term. The DRC could also soon overtake the US as the world’s number four producer of copper.
Cobalt production is forecast to hit 86,000 tonnes by the end of the decade, that’s up from fewer than 18,000 tonnes in 2007 according to the country's central bank. The expansion of copper output is more spectacular from 96,000 tonnes in 2007 to a forecast 1.4 million tonnes in 2020. Gold production is estimated to have grown to 35 tonnes by 2020 from a measly 122 kilograms in 2010.
BMI Research predicted in January that better metals prices, new projects coming online and expansions at existing operations “will make the DRC the fastest growing major mining market in the world this year, despite mounting political and regulatory risks.”
In an update last week BMI, a unit of Fitch Group, reiterated this view saying the new law will not alter the positive outlook for mining in the country:
Even with the announced hike in mining levies, the DRC's royalty rates will remain among the most competitive in the world for key sources of income, including copper and gold, meaning the domestic investment environment is unlikely to be impacted.
Source : Mining com