eBusiness Weekly
The Democratic Republic of Congo is in uncharted waters as the nation awaits election results marking the end of President Joseph Kabila’s rule. One thing is certain: the mining world is watching closely.
Congo, which held presidential polls on December 30, is one of the world’s most important but difficult mining jurisdictions. 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.
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 cancelled 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.
Fool’s Errand
On the campaign trail, Shadary’s team criticised the opposition by claiming they would reverse the mining code, while Fayulu and Tshisekedi’s camps have indicated in interviews they’d at least re—engage with the mining companies and listen to their concerns.
“No one’s made any specific assertions on what they’re going to be doing to the mining industry post elections,” said Ben Davis, an analyst at Liberum Capital Markets.
“There are too many unknowns. Praying for any one candidate is a bit of a fool’s errand.”
State-owned mining company Gecamines, headed by Kabila ally Albert Yuma, last year renegotiated joint ventures with Glencore Plc and Eurasian Resources Group BV in deals that involved billions of dollars of debt forgiveness by their parent companies. Yuma has repeatedly said he plans to revisit all partnerships with international mining companies, a course of action that would likely continue under a Shadary presidency.
The elections are a milestone for Congo, which has never witnessed a peaceful transfer of power. The electoral commission has said it can’t give provisional results before January 6, however, an organisation representing the country’s influential Catholic bishops said Thursday that “data in its possession” from polling stations already show the outcome.
Global giant with a 58 percent market share
Congo, home to deposits of gold, diamonds, tin and coltan, is renowned for its copper and cobalt output — it accounts for more than half of global production of cobalt. 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. this week, 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. — Bloomberg.
