Energy shortage dents DRC copper mining


Lusaka – Copper outturn in the Democratic Republic of Congo (DRC) is forecast to slow down this year on account of insufficient energy supply and increased uncertainty over new mining laws.

Growth in the copper-producing nation will slow down in 2014 from its rapid pace the previous year due to insufficient energy supply and uncertainty over new mining legislations, Reuters reported citing DRC’s mining chamber.

Copper production leapt to a record 914 631 tonnes last year from 620 000 tonnes in 2012, as new mining projects and expansion plans came online, Reuters said citing a report on the first quarter of 2014.

The country’s chamber of mines predicted copper output in 2014 to rise to 922 000 tonnes, annual growth of just 0.82 percent compared with the 47 percent leap a year earlier.

“(DRC) still has the potential to produce over a million tons in 2014 and even more in following years, if it controls the parameters that influence investment, notably electricity supply and the revision of the mining code,” the chamber was quoted as saying.

The country’s mining sector helped drive economic growth of 8.5 percent in Congo in 2013, which is forecast to surge upwards to 8.7 percent this year.

DRC is renowned for vast mineral reserves including gold, diamonds, copper, cobalt and tin. However, the majority of its more than 22 million populace live in poverty due to corruption, mismanagement and war.

International mining operations are drawn to DRC’s copper-rich Katanga province, but they have been hamstrung by a lack of reliable energy from dilapidated power sources and energy grids. DRC’s national energy company, Société Nationale d’Electricité (SNEL) lacks the finances to overhaul its equipment.

“Demand (for electricity) has exceeded what can be delivered by SNEL since 2009, and with the exception of 2011, the gap has only grown, which is more than worrying,” the report said.

In January, Prime Minister Augustin Matata Ponyo in a letter to mining companies in Katanga asked them to suspend expansion plans and respect energy rationing imposed by the government, intended to cope with the power deficit.

Companies have united, meanwhile, to oppose proposed changes to the mining code. Mining representatives are negotiating with the government over the proposed changes.

The government is seeking to increase royalties on mined material and to reduce stability clauses, a plan that the mining chamber has said will reduce foreign investment in the sector in the long term, Reuters added.

The report also highlighted an expected surge in industrial gold production from 6 149 kg in 2013 to 18 872 kg in 2014.

The spectacular increase in industrial gold production is due to several projects coming online, which were in the construction phase.

“It would have been difficult to launch these projects … under a mining code with a heavy fiscal burden and a stability clause reduced to three years.” The report adds, according to Reuters.

Last year, the DRC topped Zambia in copper outturn on account of among other drivers, a reliable fiscal regime but amid civil strife between government forces and M23 rebels, beating Zambia in second slot ‑ a position it has held for over 26 years.

July 2014
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