Mining: Copper’s reputation tarnished (The Africa Report – January 20, 2015)

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Between the infrastructure deficit, revisions to the mining code, instability and Gécamines’ dodgy deals, copper is losing some of its conductivity with investors.

The year 2013 was a record breaker for the Democratic Republic of Congo (DRC), which produced an estimated 913,000tn of copper, a third more than in 2012 and its highest level for many years.

The government had predicted that copper output would be even higher in 2014, topping 1m tonnes, but a chronic and debilitating shortage of electricity has put paid to that. Annual copper output for 2014 looks like it may be less than 900,000tn.

Investors are also worried about long-delayed changes to the mining code and militia activity in Katanga Province. The electricity crisis is immensely frustrating to international mining companies operating in Katanga, all of whom were promised adequate power by the Société Nationale d’Electricité (SNEL) when they invested.

Tired of endless arguments with SNEL, the big companies went to prime minister Augustin Matata Ponyo to voice their concerns. In January 2014, he told companies that SNEL would ration power and that companies would have to restrain their expansion programmes.

He wants a much higher contribution from mining to the national fiscus and has identified the ongoing power shortage as a major obstacle to achieving this.

Goodwill, no action

After their meetings with Matata Ponyo, some senior mining company executives reported that SNEL suddenly became more responsive but conceded that it has not made any discernible difference yet to the electricity supply.

“The fact remains,” one executive who requested anonymity tells The Africa Report, “that SNEL oversold its capacity and ability to deliver”.

A senior adviser on electricity in Matata Ponyo’s office agreed that “there is goodwill now, but still no action”.

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