The Democratic Republic of Congo (DRC) has told miners to halt any project expansion requiring more power, amid a shortage that will take years to resolve, according to government documents.

The country will institute an electricity rationing programme for miners and its State-owned power company must stop signing new contracts, Congolese Prime Minister Augustin Matata Ponyo says in a January letter to the Ministers of Mines and Energy.

“I equally deem it necessary that mining clients postpone immediately and until further notice all expansion projects requiring supplemental energy,” Matata says in the letter, which was given to Bloomberg News by a member of the Federation des Entreprises du Congo (FEC), the Congolese business group, and verified by the DRC government.

GlencoreXstrata’s Mutanda and Katanga Mining projects and Freeport-McMoRan Copper & Gold’s Tenke Fungurume mine are the DRC’s top copper producers. Katanga Mining is scheduled to expand production to almost 300 000 t by the end of the year, according to statements and filings on Glencore’s and Katanga Mining’s websites. Tenke planned to add a second sulphuric acid plant by 2016, Tenke Fungurume Mining said in a January press release.

Both Mutanda and Katanga Mining will have more than enough energy to meet their needs for 2014, according to a November 2013 report on Glencore’s website. Eleven per cent of Mutanda’s 2013 energy came from generators, the report says.
Record Production

Katanga’s miners have already spent or pledged more than $600-million to improve the power supply, according to the letter. Tenke will spend more than $200-million, while Katanga Mining and Mutanda have pledged more than $300-million to rehabilitate and expand power delivery from the Inga hydro site to Katanga, the document says.

Mining contributes about 80% of Congo’s annual export revenue and accounts for about 30% of gross domestic product, the letter says. Copper production topped 900 000 t in 2013, a record for the Central African nation, according to the International Monetary Fund. CRU Group ranked the DRC the biggest producer in Africa and the world’s sixth-largest last year.

Zambian Imports

The DRC can provide only about half of the 900 MW demanded by miners in the province of Katanga, where the country’s copper is primarily located. The country can import about 100 MW from the State-owned Zambia Electricity Supply Corporation and another 50 MW from the Zambia-based Copperbelt Energy Corporation to help make up the difference, according to the letter.

“Without this input, no significant increase in existing production nor development of new operations is feasible,” Matata writes. “New energy projects will not come on line “for several years”, he adds.

After mediating discussions between FEC’s Chamber of Mines (CoM) and the State-owned Societe Nationale de l’Electricite, government decided to ration its 461.7 MW of available power among all of Katanga’s miners, according to the letter.
Electricity allocations were made based on existing contracts, production importance, and the minimum energy required for profitable business, the letter says.

Under the rationing programme, Tenke and Katanga Mining will attain their minimum power requirements when imports from Zambia are taken into account, the letter says. Glencore’s Mutanda will receive 96% of its minimum needs, while MMG’s Kinsevere project will receive 80% of its required energy.

Rationing will also see deficits for projects run by Eurasian Natural Resources and Jinchuan Group International Resources. MMG is able to meet the total power needs for Kinsevere through diesel generators and there is currently no change to forecasts on production or costs, according to Kathleen Kawecki, a Melbourne-based spokesperson for MMG.

The rationing of power does not affect production at Jinchuan’s Ruashi mine, as the company has had self-generating power capacity since last year, says CFO Tak Chuen Wong. The company will explore other sources of power, he adds.

The letter promises more efficient management of the power supply and of payments to Zambian energy providers to ensure more reliable service. Miners who choose to import power from private suppliers above and beyond the current system will have to pay a premium of 50% above the usual rate.

The DRC government has also decided to open operation and maintenance of Katanga’s high-tension networks to private third parties in partnership with the State-owned electricity utility, Snel.

The DRC Parliament has passed a law liberalising the electricity industry, which will allow for private investment in new projects and which is awaiting President Joseph Kabila’s signature. Last month, the DRC government postponed a ban on exports of concentrated copper and cobalt to 2015 because it lacks the power to process the minerals.

“I want more companies to come to Katanga to invest in energy in the province,” governor Moise Katumbi said last week. “There are several sites where we can build hydro plants to power future invest-ment in the copper industry.”

The DRC CoM is “continuing to search for solutions to work around this critical situation”, says Simon Tuma-Waku, the body’s VP.