New president in Democratic Republic of Congo could impact mining
The Democratic Republic of Congo is one of the most important mining districts in the world as the global leader in cobalt production. It is also home to deposits of copper, gold, diamonds, tin and coltan. It is also a complex jurisdiction politically which has perhaps gotten more complicated with its Dec. 30 presidential election of which opposition leader Felix Tshisekedi was declared the winner on Jan. 10. That election marks the end of President Joseph Kabila’s rule and the results could have significant, and possibly positive, 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, and on the campaign trail Tshisekedi that hikes to tax and royalty rates in the new mining code had gone too far, going as far as to call them “anti-investment.”
Following the announcement of Tshisekedi’s victory, Bloomberg’s lead Congo analyst Indigo Ellis said, “The results are preliminary so “many mining investors will likely hold off for the next two to three months at minimum to see how the transition period plays out,”
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 kt (330,000 st) of copper and 26 kt (28,600 st) 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.
“It’s a bit early to say; we think the election process proceeded smoothly, and it’s good to see the results have been announced and people have accepted, it means there is a democratic process that’s working and that’s the positive,” said Barrick chief financial officer Graham Shuttleworth.
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.