THE COST OF DOING BUSINESS IN THE DRC HAS TO BE ADDRESSED | DRC Mining Week
It was a case of the energetic young lion squaring off against the wise, older elephants when a discussion about DRC’s mining code caused the temperature of the discussion to rise somewhat during a live webinar session on the first day of this week’s Digital DRC Mining Week. The webinar focused on How existing and emerging player become/remain successful in the DRC.
The webinar started with a discussion of the industry amidst the COVID-19 pandemic, with, Dr Willem Jacobs, COO – Africa & Middle East at Barrick Gold stating that “international players have been most affected because travel and movement have been affected. However, Africa is used to dealing with pandemics. You can control this, you can work close to normal conditions by just sticking very diligently to your worked out plans and staying disciplined. Barrick has not really been affected by COVID from a production point of view.”
He added: “we’ve had only one case of COVID-19 to date in Kibali thanks to an all-out integrated programme to educate the community and our 4000 mining staff.”
The DRC’s rich mineral resources and the country’s reputation as a corrupt, risky investment destination inevitably led to the topic of the country’s new mining code.
South African mining junior Olebogeng Sentsho, CEO of Simba Mgodi Mining, described DRC as “an unexplored gem with spectacular opportunities”, saying junior miners needed to be “agile and condition themselves to doing business unusual.”
“It’s no secret that many countries in Africa are perceived as doing the wrong things” said Rudolph De Bruin, Founding Partner of the private-equity fund AMED Funds, “and some of the main players in DRC have difficulty explaining certain issues to their shareholders.” However, “with good rewards come higher risks. DRC still has the better mineral deposits. DRC is still elephant country if you want to find big elephants.”
Why is everybody not in the DRC?
Dr Jacobs stated that “the grades in most of the metals that you find in the DRC are some of the highest in the world. Yet the cost to mine in the DRC is also two and a half times higher than anywhere else in the world. The cost of doing business in the DRC has to be addressed. The 2018 mining code, in at least three places, is very poorly worded, where your repayment of loans and dividends is in question.”
He said the potential of DRC’s geology has been known since 1816, “so why is everybody not in the DRC? We are sitting on a world-class deposit in Kibali and we’ve been doing very well out of the DRC. But, we as a mining industry have to understand that if you cannot repay a loan or dividends to investors or shareholders, there is no reason why anybody would put a dollar in the DRC.”
To which the South African junior miner Elobogeng Setsho replied: “your issues with the mining code need to be addressed directly with the Department of Minerals and Mining in the DRC. Because there was a time when we were allowed to make submissions as to what we felt needed to be in that mining code.”
She continued: “that mining code and its poor wording is a direct consequence of big miners, such as yourself, failing to contribute meaningfully to the implementation and the wording of that code. In addition, we are not saying don’t repatriate funds, we are saying develop as you repatriate your funds. Don’t pillage, that’s my point, do not pillage. We need to take a far bigger responsibility for those host communities. There has to be a balance.”
The Barrick Gold COO for Africa & Middle East responded: “I didn’t see your face in the 2018 mining debate mam. Boris (Kamstra) and I were in the trenches. We were part of a group of seven miners that went to see the President, that were involved for six months in that mining code. Not one of the contributions that the mining industry made, by the way, was accepted in any of those working sessions. So please, when you make statements like ‘you big miners’ don’t say us. The 2018 mining code debate is still not finished. We have been invited for the last two years, on a case by case basis, by the Minister of Mines to talk to the mining industry. To date, not one of those invitations has materialised.”
Fellow panellist Pangea and Alphamin director Boris Kamstra agreed that “unfortunately the ministers had changed and some of the momentum with the issues that were being debated has abated somewhat. And we look forward to an opportunity to pick it up again.“
Keynote session with DRC mining minister
In the opening session of the day, the keynote of Digital DRC Mining Week, Prof Willy Kitobo Samsoni, DRC’s Mining Minister said that “with COVID-19 about 20% of revenue will be lost for the country’s mining sector.” He noted that several projects had also been postponed.
According to minister Samsoni the government was “reviewing lockdown measures to maintain our activities in the mining sector”. He admitted that the pandemic “had also impacted the traceability of minerals in the artisanal sector because inspections have been interrupted.”
Jean Marc Châtaignier, EU ambassador to DRC stated: “as buyers of products in the region we need to ensure that the value chain is controlled and the traceability is respected.”
Serigne Diene, Economic Counsellor in the Office of the United Nations’ Special Envoy for the Great Lakes Region said “regional integration, as we saw during COVID-19, can be used as a shield and help countries face collectively transnational issues such as the pandemic.”
Affected trade
During the last webinar of the first day of the Digital DRC Mining Week programme, the focus was on trade and how the COVID-19 pandemic had affected international trade with the DRC, moderated by Cedric Longange, Chairman of the Congolese Chamber of Commerce in Great Britain.
“This COVID is really going to affect our industry enormously” said Eric Bruggeman, Director and CEO of the SA Capital Equipment Export Council (SACEEC). “Everyone is trying to get going again but the entire supply chain is not active yet. We have to find a new way of marketing, we can’t have big exhibitions such as DRC Mining Week which was supposed to take place in Lubumbashi this week. We need to find new markets and new ways of getting into those markets.”
“Figures show that COVID has had a very serious effect on German mining equipment manufacturers” was the opinion of panellist Helmut Schgeiner, Technical Director at VDMA Mining (the German Association of Mining Suppliers), the convenors of the first German pavilion at DRC Mining Week in 2019.
He added that although the German government has “pumped a lot of money into the business structures to help against the COVID” that it would not help the German businesses that are trying to do business with the rest of the world that is not ready to resume business yet. “Also”, he said, “you can only restart your international business if it is possible to travel safely.”
John Kanyoni, Vice President of the DRC Chamber of Mines stated that the tensions between China and United States were also a factor affecting the DRC’s mining industry. “Our mining industry today relies fully on China because China is the main buyer of our commodities and the current demand is on the lower side. If you look at the price of copper today, it is really volatile although our production is on the same line. The only metal which is in a very good position and surviving is gold.”
