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Congo businesses denounce ‘unjust’ taxes in copper-mining region

KINSHASA – The Chamber of Commerce in Democratic Republic of Congo has complained to the government about a worsening business climate in the country’s copper-mining region, including what it says are unjustified duties on power imports.

In a letter to the finance minister dated June 1, the chamber said Congo’s customs agency has levied more than $300-million in penalties on mining companies for failing to declare electricity imports or making false customs declarations.

The chamber said this was despite the fact the public power utility, rather than the companies themselves, imported the electricity before selling it on, according to the letter.

“To force the companies to pay the unjustly demanded sums, the (customs agency) uses heavy-handed tactics, going as far as withholding the goods of the concerned companies so that they quickly give in and pay the high penalties,” the letter said.

The finance minister, who oversees the customs agency, did not immediately respond to a request for comment.

Authorities routinely say they are committed to improving Congo’s business climate, which ranks a lowly 184 out 190 countries on the World Bank’s Doing Business Index.

However, mining companies say they see little progress and are also concerned about a government proposal to revise the 2002 mining code to raise royalties and other taxes to boost the cash-strapped government’s revenues.

Mines Minister Martin Kabwelulu told Reuters on Friday the proposal would be presented to parliament later in the day.

Despite such concerns, mining giants such as Glencore, Randgold and China Molybdenum have made major investments in Congo, Africa’s top copper producer and a significant producer of cobalt, gold and diamonds.

But electricity poses a knotty challenge. Congo’s copper-mining Katanga region receives only about half the power it needs from the national grid, forcing operators to rely on expensive generators or imports from neighbouring Zambia.

The state power utility recently signed a provisional agreement with South Africa’s Eskom to import 200 MW of power which would be used by mining companies.

Source : Mining Weekly

Banro welcomes safe return of kidnapped employees

JOHANNESBURG – The four employees kidnapped in March while working at dual-listed Canadian gold mining company Banro’s Namoya gold mine, in eastern Democratic Republic of the Congo, have been released after a “long and difficult ordeal”.

The company on Monday announced the safe return of its employees, three Congolese and a French national, who were kidnapped, along with a fifth employee, a Tanzanian who had been later freed, allegedly for ransom.

“Banro extends its heartfelt thanks to all those in the community and government and so many others who supported our efforts to gain our colleagues’ safe return. The priority now is to reunite our colleagues with their families and provide them with support,” the company said in a statement on Friday.

Miningmx earlier reported that the release followed several days of negotiations and demands of a $1-million ransom, in addition to contractual agreements from Banro that it would build basic infrastructure in the area.

It is reported that the kidnappers formed part of the local community and did not think the company was doing enough to provide jobs.

The Canadian gold miner has been a target in recent months, the most recent just over a week ago when armed intruders failed in their storming of the Namoya mine camp. While the mine’s workers were unharmed, there were at least three fatalities – one intruder, one military personnel and one policeman.

This had followed a series of attacks on police and military personnel in the village areas surrounding the mine earlier in May.

“Reinforcements to support the police and military have arrived on site. As a precautionary measure, foreign nationals and non-essential local staff will be leaving site on a temporary basis until the security situation stabilises,” the company had said in a statement on May 18.

Mining operations restarted on May 22.

Banro’s sister site, Twangiza gold mine, continued operations as normal, however. In February, it had also been a target of armed robbers attempting to forcibly enter the site in a siege that left three mine police officers and one of the armedrobbers dead. A security guard was injured.

Further, newswire Bloomberg in September reported an ambush of a convoy of Banro-contracted empty trucks after delivering fuel and mining equipment, when 13 drivers were kidnapped and six trucks burned some 40 km from Namoya.

The 13 drivers were released shortly thereafter after an offensive undertaken by the Congolese army.

The 23 local drivers of the trucks, which were operated by Banro subcontractor Simba Logistics, were immediately released, with the armed group specifically targeting foreign nationals, allegedly for ransom, Bloomberg had reported.

Before this, a Banro spokesperson had told Bloomberg that there had been no similar incident since the company’s establishment in the region in 2004.

Source : Mining Weekly

Congo plans to reintroduce mining code revision next week

KINSHASA – Democratic Republic of Congo’s government plans to reintroduce legislation in Parliament next week to revise the mining code a year after withdrawing it amid fierce opposition from mining companies, the mines minister told Reuters on Friday.

The government of Africa’s largest copper producer suspended consideration of the revised code in March 2016 due to low commodity prices. Companies said its increased royalties and shortened stability clauses would make their projects unprofitable.

Mines Minister Martin Kabwelulu did not say whether the legislation, aimed at boosting government revenues, would be identical to the earlier proposal.

Representatives from the industry-led Chamber of Mines could not be reached immediately for comment.

Low commodity prices since 2015 have left the government in desperate need of cash and caused the franc currency to lose half its value since last year. The mining and oil sectors account for about 95% of export revenues.

Congo’s copper production jumped more than 20% in the first quarter of this year as prices recovered. The Chamber of Mines expects annual production to hit about 1.5-million tonnes in 2018, up from around 1-million in 2016.

Source : Mining Weekly

More than a dozen protesters killed in DRC clashes

Government bans demonstrations against President Kabila after 17 people, including three policemen, killed in clashes.

 

At least 17 people have been killed during clashes between police and anti-government protesters in Democratic Republic of Congo’s capital of Kinshasa.

Interior Ministry spokesman Claude Pero Luwara said on Monday three of those killed were police officers. A Catholic nun said one of the policemen had been “burned alive” during the violence outside the ruling party office in Kinshasa’s volatile Limete area.

The government banned demonstrations against President Joseph Kabila following the deadly clashes.

Lambert Mende, a government spokesman, accused the opposition of “targeted looting”.

“We have now banned the demonstration,” Mende said. “These are people who had prepared to create total disorder.”

Opposition groups however, have called for further demonstrations. In a statement, they said more than 50 people have been killed in the clashes.

Police fired tear gas to disperse hundreds of stone-throwing opposition supporters in Kinshasa, as they tried to march on parliament before a planned mass demonstration to demand that Kabila quit power when his mandate runs out in December.

The demonstrators waved the blue-and-white flags of veteran Congolese opposition leader Etienne Tshisekedi, 83, whose movement had called for nationwide protests on Monday to demand that Kabila steps down on schedule.

Youths were blocking traffic on Lumumba Boulevard, a main artery, letting only journalists through.

A diplomatic source reported further clashes in “several places” on the road to the capital’s airport.

Kabila, who has ruled mineral-rich DRC since 2001, is banned under the constitution from running for a third term – but he has given no sign of intending to give up his job.

No elections have been announced and it would be practically impossible to organise a poll before the end of the year.

France urged Congolese authorities to ensure the “delay” in holding the next presidential election is “as short as possible”, and called on the government to respect “public liberties, especially the right to demonstrate peacefully”.

Rights group Amnesty International had on Thursday accused Congolese authorities of “systematic repression” of those seeking Kabila’s departure when his third term runs out on December 20.

The United Nations on Friday said that at least 16 opposition activists had been detained in Kinshasa after meeting to discuss how to stop Kabila illegally prolonging his stay in power.

 

Source – Al Jazeera

 

Zambia-DRC power project on course

THE Copperbelt Energy Corporation (CEC) says the second Zambia- Democratic Republic of Congo (DRC) 220 kilovolts interconnector project is on schedule and is expected to be commissioned in the third quarter of this year.
In 2009, CEC submitted an environmental impact statement report on its plan to implement the project and it was approved.
According to the company’s consolidated audited results for the year ended December 31, 2014, issued by company secretary Julia Chaila, the project will facilitate the development of an efficient regional power market, which will decelerate the increase of electricity prices in the Southern African Development Community.
Mrs Chaila said the project is important as it will expand the current capacity of the transmission corridor between Zambia and DRC to 550 megawatts from 250 megawatts.
She said the project will also contribute to enhancing regional power trade in the Southern African Power Pool (SAPP) and offer a firm path in support of CEC’s increasing important international power trading business.
“The second Zambia-DRC 220 kilovolts interconnector project is anticipated to be commissioned by the end of the third quarter of 2015,” she said.
The group intends to complete a feasibility study for the hydro-power station on the Luapula River this year to help increase its power generation capacity. So far, the company has spent over US$2 million on the initial studies.
Under the project, there are five hydro sites capable of generating 700 megawatts which define the border between Luapula Province in Zambia and Katanga Province in DRC.
“We will continue to develop other projects in Namibia, Sierra Leone and Zambia, including the completion of feasibility for potential hydro projects on the Luapula River,” she said.

Source – Daily Mail Zambia

SADC Hold Ebola Meeting in Zimbabwe

Cape Town – SADC health ministers are holding a two-day meeting in Zimbabwe to hammer out a regional strategy to deal with the Ebola epidemic following confirmed cases of the virus in the Democratic Republic of Congo.

According to The Herald, chairperson of the SADC health ministers forum David Parirenyatwa said the meeting would deliberate on how countries were managing the Ebola outbreak.

The DRC confirmed early this week that the virus had killed up to 36 people out of 81 suspected cases.

Parirenyatwa said SADC, unlike West Africa, had an opportunity to strengthen its preparedness should the virus hit the region.

The preparedness of southern Africa to deal with the Ebola virus has remained in the spotlight, especially after Zimbabwe admitted recently that it was not well equipped to deal with an outbreak of the disease.

Zimbabwe said it had no capacity to conduct tests to detect the deadly disease, saying specimens from suspected cases of Ebola would be referred to South African laboratories for verification.

The Ebola outbreak in West Africa has killed 1 900 people, and officials warn that time is running out to control it, according to reports.

The disease was first identified in the DRC, then called Zaire, in 1976 near the Ebola river, which gave the virus its name.

The disease causes massive haemorrhaging and has a high fatality rate. It is transmitted through contact with blood and other bodily fluids.

There is no vaccine for Ebola.

 

Source – News24

Kibali officially opened, could herald birth of new DRC economic region

JOHANNESBURG – Democratic Republic of Congo (DRC) Minister of Mines Martin Kabwelulu on Friday officially opened the Kibali gold mine, operated and developed by Africa-focused miner Randgold Resources.

The mine, which would rank as one of the largest gold mines in Africa once it reached full production, was owned by Randgold and gold miner Anglogold Ashanti – each with a 45% stake and more than $2.5-billion invested in the project – in partnership with the DRC State gold mining company Société Miniere de Kilo-Moto.

Kibali, which was currently an operating mine as well as a development project, had produced 88 200 oz of gold and made a profit from mining, before interest, tax and depreciation, of $68.3-million in the three months to December, its first production quarter.

The mine was currently producing gold from its openpit mining operation and oxide circuit.  Commissioning of the sulphide circuit started during the last quarter, while development of Kibali’s underground mining operation remained on track with the vertical shaft reaching the halfway mark and the first underground ore accessed.

The first of four hydropower stations were also currently being commissioned and, with a capacity of 22 MW, it was the largest of its kind in the Orientale province.

Speaking at the opening of the mine, Randgold CE Mark Bristow said the successful development of Kibali could herald the birth of a new DRC economic region to rival the Katanga province.

“To achieve that, we cannot rest here. We need to ensure that we deliver the returns expected by the investors who entrusted us with their money. We have to run a profitable mine, focused on long-term viability, that pays taxes and employs and develops citizens from this region and this country. Kibali must become the catalyst that triggers the additional investment required to grow a strong regional economy,” he said.

Also speaking at the opening, Randgold chairperson Philippe Liétard added that the successful development of Kibali in the face of many infrastructural and other challenges was a triumph for the company’s partnership philosophy.

“Here we have shown what can be achieved in Africa when we all work together; a government that understands the importance of attracting and retaining the investments that are necessary to build a modern economy; two mining companies that believe in sharing the value they create with all their stakeholders, especially the local community; a labour force that is eager to grasp the opportunity of working and learning; and a people who have welcomed us and supported our endeavours,” Liétard said.

Meanwhile, AngloGold Ashanti chief executive Srinivasan Venkatakrishnan said for Kibali’s full potential to be realised it was of the utmost importance that the DRC’s mining code remained supportive of the gold mining sector.

“The government now has an important opportunity to show the world that it is welcoming of gold mining by helping to create what can in a short time become one of the largest gold producers in the world and an engine of growth for this region and this country,” he noted.

 

Source – Miningweekly

Africa’s push to add value to minerals now a riskier gamble

African government efforts to force mining companies to process minerals before export may backfire as they come up against weakening commodity prices and investor demands that firms reduce risky investments.

In the last year alone, Zimbabwe, Zambia, Democratic Republic of Congo (DRC), Namibia, South Africa and others have hinted at, announced or put in place measures aimed at adding value to minerals exports, which would boost tax revenue, encourage formation of new businesses and add jobs.

But with falling metal prices and a drastic reduction in the capital available for the mining industry, wary companies are increasingly shying away from investment in countries where the rules of the game can change quickly.

“Investment sentiment in the last year has moved against the mining sector, but the governments tend to have a lagging view of how this is going to affect investment in their countries,” said Mike Elliott, global mining and metals leader at Ernst & Young.

“They continue to argue that mining needs to make a bigger contribution to their economies, but you’ll have to see investment severely tail off to make them think they need to attract investment rather that scare it away.”

Consultants say governments could find more targeted and effective ways of adding value to local economies.

For example, they could push local companies that provide services for the mining industry such as logistics, security, catering and construction to become more competitive and then tighten regulation around the procurement of such services, consultant Tom Wilson at Africa Practice suggested.

“Ultimately you can’t turn market forces on their head. You have to figure out where the country has the capacity to fill the need for goods and services and provide some structures that actually help indigenize some businesses,” Wilson said.

The top five mining companies are slashing total capital spending from a peak of about $70-billion in 2012 to an expected $46-billion in 2015, according to Reuters I/B/E/S.

Mining firms have been taking costly writedowns following years of risky bets to pursue growth, and they now need to prove to shareholders they can use their cash more wisely.

“Companies need to decide whether they wish to continue mining in these countries and face what the governments want to do in terms of beneficiation or pull out. And in some cases it will be a pull-out strategy,” said Kevin Goodrem, vice president of beneficiation for De Beers Group.

THE HARD LINE

Zimbabwe, which holds the world’s second-largest platinum reserves after South Africa, has taken a hard line. President Robert Mugabe late last year threatened to stop exports of raw platinum in a bid to force mining firms to process the metal domestically.

The government said last month it had short-listed two companies to build a refinery by 2016, but industry players expect the project will take much longer than two years.

A source at a mining company operating in southern Africa said the volumes mined in Zimbabwe are not enough to make construction of a $2-billion to $3-billion refinery economically viable, and he was sceptical that the energy supply would be sufficient to run it.

But companies operating in Zimbabwe, which include top world platinum producers Anglo American Platinum and Impala Platinum Holdings, have to remain engaged with the government to avoid losing assets.

“For the platinum miners who operate in Zimbabwe, it is a very concerning time. And it is a bit of a tragedy for Zimbabwe, because they are a very significant producer, but no global capital is going to go there today with that policy uncertainty,” Elliott said.

The DRC and Zambia, Africa’s largest copper producers, are also trying to boost downstream investment.

Kinshasa is trying to implement a ban on exports of copper and cobalt concentrates but has so far encountered the resistance of the powerful governor of Congo’s copper-producing Katanga province.

Many in the industry say the ban is unrealistic as acute electricity shortages hamper processing activities in Congo.

In Zambia, President Michael Sata in October revoked a law that had suspended a 10% duty on exports of unprocessed minerals including copper, iron, cobalt and nickel.

Miners say that although some plants are being built, Zambia does not have enough smelting capacity to process all its copper, so they are accumulating high stocks of concentrate.

“Some of these countries are trying to run before they can walk,” Deutsche Bank analystRobert Clifford said.

“I understand why they want to do it, but they have to provide some assurance to companies that they are not going to pull the rug out from under their feet and change the rules once they have spent billions of dollars.”

Also new smelters and plants may not make sense if their products are expensive and uncompetitive in global markets.

Mining experts say governments should avoid blanket policies and instead target parts of the industry that will actually benefit from downstream investment.

They cite Indonesia’s controversial ban on exports of unprocessed mineral exports as an example.

The ban is expected to boost downstream processing investment in the next few years in nickel, where the country is competitive. But in copper, it is expected to achieve little besides souring the relationship between the government and producers.

Wary of the risks, Namibia seems to have taken a softer approach so far. The government has commissioned a study to identify the commodities it would be more beneficial to process.

“You have to be careful with value-addition policy, because the risk is that it could be value disruptive,” said Magnus Ericsson, founder of the Raw Materials Group, a consultancy that advices governments and companies on mining issues.

“One policy doesn’t fit all. That’s a recipe for disaster.”

Source – Mining weekly