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BNN News Archive Page
       Monday, September 18, 2006

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DR Congo Mining Growth Projected 400 Percent

By Staff
GLCSS


MIGA, the political risk insurance arm of the World Bank, expects the face amount of loans guaranteed in the Democratic Republic of the Congo’s (DRC) mining sector to increase from $20.8 million today to over $500 million in three years. However, underneath the immense economic opportunities lie significant social and human rights concerns.

According to Nick Halkas, MIGA Global Head for Oil & Gas, Mining and Chemicals, his organization is looking at a growing exposure to the DRC. Halkas told the Africa Downunder Conference in Perth that the organization operates the Dikilushi copper mine, which is increasing its stake in copper and cobalt resources in the DRC.

It has reportedly acquired an additional 10 percent interest in the mining rights for the Kinsevere-Nambulwa copper cobalt deposits, located 30 km northeast of Lubumbashi, Katanga. It acquired the interest from its Congolese joint venture partner in the Kinsevere-Nambulwa project.

Reportedly, Anvil paid $10 million in cash and $4 million in common shares, for a total consideration of $14 million. An aggregate of 602,410 common shares of Anvil was issued at a price of $6.64 a share. Completion of the acquisition takes Anvil’s interest in the joint venture from 70% to 80%.

Another exploration company, Teal, is convinced it has the potential to be a large copper-producing company in the next three to five years. According to CEO André Wilkens, Teal is building an electric-arc furnace at its Kalumines copper/cobalt project in the DRC, which has a capacity to produce 5,000 tons a year of black copper ingots with a grading of 85% to 95% copper.

Ruashi, a unit of South Africa's Metorex, started mining activities in Katanga in August with high expectations. Reportedly, Ruashi hopes to extract by October 1,100 tons of copper and 100 tons of cobalt each month. It currently employs 146 Congolese in its workforce of 150 people, and this is set to more than double in the second phase of the project when ore production is due to rise to 45,000 tons of copper and 3,500 tons of cobalt a year.

Companies, which had left because of the war and political risk, are now returning. For example, the diversified miner Anglo American plc is reportedly re-establishing itself in the DRC, after difficulties with the United Nations Sanctions Committee. Speaking in the Africa Downunder Conference in Perth, Vice President Exploration Division Ian Willis disclosed his company’s plans to expand its DRC operation and he expressed regret that Anglo had earlier decided to pull out of the DRC.
As reported by GLCSS, the influx of foreign mining companies is likely to continue to increase in the coming months; however, they will face considerable challenges. Reportedly, companies operating in Katanga have been experiencing difficulties due to problems they inherited from Gecamines, the former owner and the DRC mineral resources board. Other challenges include illegal miners, an unclear legal system and mismanagement that result in legal disputes. In addition, there are problems stemming from militia, mine collapses and bandits.

Human rights and child protection concerns are gaining significant attention because children work as small-scale artisanal miners, who many times are supporting families. According to a study conducted by Groupe One, a Belgium non-governmental organization, and the United Nations’ UNICEF, around 40 percent of the child miners work part-time while going to school. Of the remainder, many are sole breadwinners after the death or departure of their fathers. To alleviate this situation, Groupe One is running a project, with financing from Belgium, to pay for schooling for some 250 child miners under 15 years old.

Apart from child protection concerns, there are reports that thousands of people in Katanga work as illicit miners, and they sell their ore illegally on the black market before it is smuggled across the border to Zambia. This activity has increased security concerns for the companies operating legally.

For example, Australia's Anvil Mining faced rioting in April when it removed illegal miners from its site at Kolwezi, northern Katanga. In early September, riots erupted near Ruashi's mine when Indian-owned firm Chemaf drove illegal miners from its property. In an opposite approach, a South African company decided not to eject its artisanal miners. Instead it issued identity cards, trying to ensure no children entered the fenced-off mine, but some reports indicate children are still working in the mines.

Mine safety is another issue. The latest incident was reported on 14 September from a Metorex copper mine located in Kalukululu about 10km from Lubumbashi. Reportedly, at least four miners were killed and dozens more are unaccounted for after the mine collapsed. Some 50 diggers were reportedly working in the mine before it collapsed.
Disputes over mining rights between the foreign mining companies and Gecamines are another serious challenge. Currently, Gecamines is in a dispute with First Quantum Minerals and Kumba Resources.

The dispute followed Gecamines invitation for tenders for the development of the Kipushi mine two weeks ago, but First Quantum Minerals and Kumba Resources claim they already have been issued with rights to this mine. At the end of the week Gecamines ruled that the companies have no right to the mine and they will proceed with the tender.

As the DRC goes into its second-round of presidential elections, economic and political stability remains uncertain. After a week of indecision, the DRC Supreme Court finally approved the 29 October elections, even though they had originally ruled that the constitution stated that elections must be held 15 days after the official results are announced.

President Joseph Kabila and challenger Pierre Bemba met for the first time since the elections and tried to present a calm face to the international community and investors. Meanwhile, armed groups associated with both candidates have been urged to stay off the street with their weapons and respect the cease-fire.


The Great Lakes Centre for Strategic Studies is a London-based think tank.



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posted by GLCSS at 6:15 AM  

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