Landmark elections could spark DRC mining boom

Landmark elections could spark DRC mining boom

Landmark elections in the Democratic Republic of Congo (DRC) this month could usher in a mining boom for the country whose mineral riches in the past have produced as much war, corruption and misery as wealth.

The July 30 polls are seen as a crucial step in bucking a historical trend in the DRC: from the 1885-1908 rule of King Leopold to the recent 1998-2003 war, exploitation of the former Belgian colony’s resources has been tainted with blood.

They will be the first free elections in the country in 40 years.

During a three-year UN-backed peace process that brought rebels out of the bush, some of the world’s largest mining companies have lined up for a stake in the DRC, promising hundreds of millions of dollars in investment and thousands of jobs.

“If there are successfully held elections, that will boost investments,” said Illtud Harris, a spokesperson for BHP Billiton, which has just opened an office in Kinshasa.

BHP Billiton has an exploration joint venture for copper with a Congolese company, and diamond exploration joint ventures with Canada’s SouthernEra and Gravity of Australia.

Many in the mining business credit President Joseph Kabila for ending the war.

“But we will work with whatever government is in place,” said BHP Billiton’s Harris.

Peace has not returned to all of the DRC. Thousands of rebels continue to roam the mineral-rich north and south Kivu provinces, which were the crucible of the most recent war.

Fighting also continues in northeastern Ituri district, where militia recently kidnapped seven UN soldiers and fired on UN helicopters.

“These things do concern us,” said Stephen Lenahan, spokesperson for AngloGold Ashanti, which has a gold exploration team in the lawless northeastern border area near Uganda and Sudan.

But Lenahan said that while elections were important, the company was implementing a long-term plan for the DRC. “A free and fair election will increase that level of confidence we already have in [the DRC].”

AngloGold was accused in June 2005 of having links with local militia and of helping them gain access to gold. The Congolese state gold mining company was trying to renegotiate agreements signed with AngloGold by previous mining authorities.

But the world’s third-biggest gold producer now had two drill rigs in the Ituri concession and was targeting 3 million ounces of resources, said Lenahan.

Some firms are waiting for the outcome of the elections. With 33 presidential candidates, 10 000 parliamentary candidates and virtually no infrastructure to work with, the UN is saying it is the most complicated it has handled.

But others have already begun ploughing money into the DRC’s Katanga province, where the state miner, Gecamines, once produced 500 000 tons of copper a year.

Under the late dictator, Mobutu Sese Seko, the company’s earnings were stolen, there was little infrastructure investment and output all but ground to a halt.

Last year, US giant Phelps Dodge, concluded a $1.6 billion (R11.5 billion), 10-year deal with Gecamines to revive a mine that would eventually yield an annual 400 000 tons of copper. Meanwhile, another company, Nikanor, is also putting money into Katanga.

The company raised $400 million in a London Stock Exchange listing this month and through rehabilitation of the Kov mine it hopes to produce 250 000 tons of copper and 25 000 tons of cobalt a year.

“From the prospective of these mining investors, [the DRC] is just too big to miss out on,” an industry source said. “Of course, there cannot be another war but it doesn’t really matter who wins the elections.”

A member of the Federation of Congolese Businesses said that some of the recent deals signed by companies were the results of years of negotiation.

“They know that Congolese politicians ”¦ couldn’t possibly live without the mining sector,” said the businessman, who asked not to be named.

But he warned some of the projects would take time to develop and would not translate into immediate production.

“It’s more about [companies] building their reserves and maintaining credibility than extracting. This is not necessarily in the best interests of the Congolese,” he added. – Reuters

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