adastra(uk) think it's

worth staying in DRC.
-- “WHEN a man with a gun and a uniform requests that you hand over your vehicle you tend to agree – no matter where you are,” says John Clemmow, an analyst at Investec Securities. That’s one interpretation of recent events in the Democratic Republic of Congo (DRC), after state soldiers commandeered vehicles owned by Australian firm Anvil Mining.

The event involving Anvil provoked fears that one of Africa’s richest mining regions had only superficially recovered from more than 35 years of civil decay. Clemmow’s not pessimistic regarding the DRC, and many who recognise its mineral wealth feel the same.

In fact, the general view of the DRC is that recovery’s in the air. That’s one of the reasons why SA’s Industrial Development Corporation (IDC) recently rubber-stamped an investment upwards of US$30m in a copper-cobalt project owned by London’s Adastra Minerals. It represents weighty evidence of the SA Government’s confidence in the DRC. “We’re going in with our eyes wide open,” says Mukesh Bhavan, vice-president for the IDC’s projects division.

But there are conditions. The first is the overarching requirement that projects requiring assistance – financial or otherwise – meet the IDC’s stringent development mandate. There’s also an interest in eradicating “brown paper deals” – as IDC head of corporate and structured finance Jennifer Feinburg terms unauthorised financial incentives.

Other concerns are that Adastra’s assets remain in company hands rather than the state’s. There’s also a requirement for Adastra to employ local artisanal workers in its project, known as Kolwezi.

So what’s so special about the DRC? “We’ve approved our investment in Adastra, knowing that the World Bank is heavily behind the [transitional] government of the DRC,” says Bhavan. For example, the DRC is incentivised to move towards democratic elections, as World Bank relief is linked to such successes. The World Bank’s International Finance Corporation (IFC) has also said it will take up 7,5% in the project.

Then there’s the matter of vast mineral wealth virtually spilling out of the DRC’s seams: diamonds, gold and base metals. Adastra’s project alone – in which it hopes to re-treat tailings dams – has a life of 40 years. China’s insatiable demand for base metals is helping to underpin the project’s economics.

Says Bhavan: “We’re confident but circumspect.”

It’s one of those areas where infrastructural development will also blow open the investment possibilities, only part of which are mining. By way of an interesting example, the IDC has been approached with three proposals to build hotels in Kinshasa, says Feinburg.