JOHANNESBURG (miningweekly.com) - Research firm BMI expects the Democratic Republic of Congo (DRC) to be the fastest-growing major mining market in the world this year.
In its latest industry trend analysis, the firm outlined that this growth would be driven by rising prices of key commodities, which would improve mining production growth.
This has already prompted the reopening of Glencore's Katanga mine, while an expansion at Randgold's Kibali mine would also support domestic gold output.
However, the firm highlighted that, despite this positive outlook, the mining jurisdiction held a number of downside risks, emerging from rising political instability. The country's President Joseph Kabila has ignored increasing calls for him to step down.
This was prompted by Congolese security forces killing at least six people and injuring 68 others in January as thousands of demonstrators held nationwide protests calling for Kabila, whose mandate ended in late 2016, to step down.
"President Kabila's failure to relinquish office at the end of 2017 will limit foreign aid and lead to the growing strength of insurgencies that will cause unrest in the central and eastern regions," BMI pointed out.
This would particularly pose risks to the numerous gold operations in the area.
The passing of a new mining charter, which would raise existing royalty rates for miners, was also a red flag, BMI said.
"The new charter would see royalty rates on base metals such as copper and cobalt increase from 2% to 3.5% or even 5% if deemed strategic metals.
"However, we do not expect this change to have a major impact on investment as the proposed increase in royalties would only bring the country in line with rates found in other jurisdictions in the region," BMI highlighted.
Further, containing up to 50% of global cobalt reserves and accounting for 86.7% of global cobalt exports in 2016, cobalt buyers would have to continue to rely on the DRC as their key supplier, owing to a distinct lack of supply from alternative markets.