article on mining in congo - 27th jan 04 Hit the 'maybe' switch
-------------------------------------------------------------------------------- By Brendan Ryan
If investors have a nagging feeling of déjà vu over the latest developments in the Democratic Republic of Congo (DRC), it's understandable. They have seen this before. Five years ago, mining companies were talking up a storm about the DRC. The country looked set to boom, following what appeared to be a convincing outbreak of peace after Laurent Kabila had stormed to power.
Sadly, the doves had started cooing prematurely as the country collapsed back into civil war. Kabila was assassinated by one of his bodyguards in January 2001. His son, Joseph, was appointed to replace him as president and, since then, the country has been on a recovery track.
So, mining companies are again starting to talk up the prospects of developments in the DRC. The latest is the Mvelaphanda (Mvela) group, whose chairman, Tokyo Sexwale, accompanied President Thabo Mbeki on his recent state visit to the DRC.
He signed memoranda of understanding giving Mvela control over part of the Kilomoto gold region in the northeast near the border with Tanzania and over the Ruashi-Etoile copper cobalt project on the border with Zambia.
Mvela is actually a latecomer to the DRC. Ahead of it are, among others, Kumba Resources, Canadian mining company America Mineral Fields (AMF) and Ghanaian gold heavyweight Ashanti, which controls the bulk of the rights to the Kilomoto region and is about to start exploration drilling.
Kumba executive director Richard Wadley comments: "In the past year there have been more positive than negative developments in the DRC but we still need to see more substantial improvements before committing to major investments."
Kumba has two projects in the DRC: the Kamoto copper and cobalt deposit and the Kipushi zinc and copper deposit, which will be a 50-50 joint venture (JV) with AMF if it goes ahead.
From Kumba's point of view Kipushi is by far the more interesting and viable of the two projects because the zinc concentrates produced from it could be refined at the group's Zincor refinery near Springs in Gauteng.
Wadley says a feasibility study on Kipushi should be done this year but first AMF has to negotiate a mining and shareholder agreement with Gecamines in terms of the DRC's new mining code.
Kumba will have to negotiate similar agreements with Gecamines over Kamoto and Wadley says it's not a straightforward exercise. In effect, the new code transfers the financial benefits of the mining developments out of Gecamines' hands and into central government coffers.
AMF's biggest project in the DRC is the Kolwezi cobalt and copper tailings project. This consists of two dams containing 112,8 Mt of oxide tailings grading 1,5% copper and 0,3% cobalt. AMF says this resource may host one of the world's largest and lowest-cost cobalt operations, producing 42 000 t of copper and 7 000 t of cobalt annually.
AMF reached agreement in November with Gecamines and the DRC government on the project and had that ratified by the DRC council of ministers on January 15. CEO Tim Read says the company will now complete the feasibility study and look to raise the required finance for the project.
Other players in the DRC include Australian-listed Anvil Mining and Canadian-listed Tenke Mining Corp.
Anvil brought the Dikulushi copper and silver mine into production in October 2002. It announced last October that it had raised US$5m from Rand Merchant Bank to fund expansion at Dikulushi which will be commissioned from the middle of this year. Once fully on stream, the mine will boost its production by 50% to an annual 20 000 t of copper and 1,8m oz of silver, contained in concentrates.
Tenke Mining controls the Tenke Fungurume copper and cobalt deposit near the Kolwezi, Kamoto and Ruashi-Etoile projects. Tenke Fungurume was developed into a mine by Anglo American in the early 1970s but the group abandoned the project in 1976 as one of its more expensive failures. The Lundin Group got involved with Tenke Fungurume through Tenke Mining from 1996. Last November, base metal heavyweight Phelps Dodge got involved too.
So there's plenty on the boil in the DRC, provided the peace holds and investor confidence continues to rise.
