Mining companies are watching and waiting for election results in the Democratic Republic of Congo

January 9, 2019

The Democratic Republic of Congo is one of the most important mining districts in the world and is home to deposits of gold, diamonds, tin and coltan. With the rise in demand for minerals that will fuel green energy and electric vehicles, Congo has become even more important as it renowned for its copper and cobalt deposits – is responsible for more than half of the world’s cobalt production.

The Democratic Republic of Congo is also a complex jurisdiction politically which has gotten more complicated with its Dec. 30 presidential election. That election marks the end of President Joseph Kabila’s rule and the results could have significant impacts on the mining sector.
Companies including Glencore Plc, Barrick Gold Corp. and China Molybdenum Co. have major operations in the country and Congo is the biggest producer of cobalt, a key material for batteries, as well as an important source of minerals from tungsten to tin.

Bloomberg reported that one of the industry’s biggest concerns in the past year has been a new mining code introduced by Kabila’s government that raised royalties, added taxes and canceled a clause that would have protected them against fiscal changes for 10 years. There has been vocal opposition from the mining industry, but so far no concessions.

The presidential contest is a three-way race between Kabila’s protege, Emmanuel Ramazani Shadary, and the two main opposition candidates -- Martin Fayulu and Felix Tshisekedi. While Shadary is expected to stick with the new mining code, the issue has not been a prominent campaign theme, so investors largely remain in the dark on the possible impact.

The elections are a milestone for Congo, which has never witnessed a peaceful transfer of power.

Glencore, the biggest commodity trader, operates cobalt and copper mines in the country and mined almost 300,000 metric tons of copper and 26,000 tons of cobalt in the first nine months of 2018. It plans to produce significantly more this year, as it ramps up production at its Katanga mine.

Barrick Gold, which completed the $5.4 billion takeover of Randgold Resources Ltd. inherited an interest in the country as part of the deal. The company now operates the Kibali gold mine in the Congo’s northeast, one of the best in the world. The operation will produce more than 700,000 ounces of gold this year. AngloGold Ashanti Ltd. also owns 45 percent of the mine.

“We believe it’s an important step for the country. We await the outcome and the consequences of the final election results,” Barrick’s new Chief Executive Officer, Mark Bristow, said earlier this week. “We will continue to work with the new authority in the DRC to ensure that we can deliver on our view that there is enormous opportunity, particularly in the North East DRC, for discovering world class gold deposits.”

Other companies in Congo include China Moly, which bought the giant Tenke Fungurume copper and cobalt mine from Freeport-McMoRan Inc. in 2017, and privately-held Chemaf, which also mines cobalt.


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