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Rise in DRC exploration activity expected

20th October 2017

     

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With the improvements in the copper price, mining interest will soon return to the Democratic Republic of Congo (DRC), says mining consultancy SRK Consulting country manager Susa Maleba.

“In fact, for explorers wanting to initiate drilling programmes, time is running out,” says Maleba.

He states that drilling companies operating in the mining areas of the DRC still have capacity and are looking for work, and “even the assay laboratories are not too busy”.

However, Maleba stresses that, once the “tide turns” and the rush begins, it will become more difficult to find contractors and everything, including the analysis, will take much longer.

He has already seen some uptick in activity, noting that SRK is active with resource estimations and audits as well as environmental- and social- impact assessments (ESIAs) and a hydrogeological study to investigate aspects of groundwater on a local mine. “ESIAs are necessary for all new projects and the DRC’s regulations require mining companies to review their ESIA studies every five years, or when there is any major change on the project.”

SRK Consulting opened its Lubumbashi office in May 2010 and has grown to comprise nine technical and four support staff. Drawing in independent scientists on an associate basis, as well as specialist expertise from SRK’s global network, the office conducts environmental, social, geological and mining studies.

Its geological services include mineral exploration, resource estimation and mining geology, as well as geotechnical work (civil and mining) and water management.

Points of potential growth in the DRC’s mining sector include companies whose plants were designed to treat metal oxide ore, “who are now looking to the future when their production from oxide deposits can be replaced with production from new sulphide reserves”, Maleba says.

He cites Chinese diversified miner MMG’s Kinsevere mine as an example, noting that it has continued mining copper oxide ore, but is also exploring its sulphide options.

“While oxide reserves are expected to sustain Kinsevere’s life-of-mine (LoM) until 2024, the primary sulphide resources underlying the oxide resources at Kinsevere have the potential to extend the LoM to 2033.”

Maleba comments that one of the factors stalling the DRC copper sector’s progress is political uncertainty. However, “once this can be resolved”, he predicts that several newcomers will enter this market.

He adds that there is hope that once elections take place and the political outlook is more certain, there will be scope for certain companies to seek the finance required to return operations to their previous capacity levels.

“To raise such funding, an independent assessment of mineral reserve holdings will be required and SRK has already been contracted to undertake this resource estimate for one important DRC-based miner,” Maleba notes.

He also highlights the ongoing disagreements over the proposed new Mining Code, on which mining companies are engaging with government, as a potential roadblock.

While there is a Chamber of Mines that existed as part of the national Chamber of Commerce, Maleba says it has not been able to reach an agreement with government on the intention to increase tax rates payable by mining companies. He adds that an additional complication is that government has not been able to pay mining companies the value-added tax they are owed.

In terms of the industry’s capacity to grow, a factor that needed to be addressed urgently was the shortage of midlevel skills in the mining sector – despite the sector’s growth over the past decade or more.

The training of artisans and technicians could be a valuable area of collaboration between the private sector and government.

“In the past, [State-owned mining company] Gecamines sponsored technical schools but this has not been sustained since it ran into financial difficulties,” says Maleba.

According to a report by the Financial Times, Gecamines was bankrupted by former President – of what was then Zaire – Mobutu Sese Seko, who was overthrown in 1997, following the First Congo War from 1996 to 1997. The company has yet to recover, largely owing to continued political instability, mismanagement and corruption.

Given that Gecamines is unlikely to step in with regard to technical skills development in the immediate future, Maleba states that this represents another important opportunity for mining companies. He notes that they can contribute more directly to share the benefits of mining at a local level by aiding supplier development.

“A new law signed in February requires mining companies to deal with DRC companies when subcontracting,” explains Maleba, adding that this is one of the methods government is implementing its attempts to promote local development around existing mining projects.

The challenge is that DRC companies – potential subcontractors – do not have the necessary capital or access to funding to strengthen their capacity to do business with mines. “Also, many of these businesses are not equipped with the necessary skills to win those contracts.”

He advises that this is an opportunity for mining companies to empower local businesses – especially with managerial and technical skills – so that they can become competent subcontractors, enabling them to “share in the benefits associated with mining”.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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