LUBUMBASHI, Democratic Republic of Congo (Reuters) – At a mining conference in Democratic Republic of Congo’s mining capital, Lubumbashi, last month, government officials and mining company executives huddled around two big tables, brainstorming how to save a failing copper mine.
The mine was fictional but the scenario was all too real: Africa’s leading copper producer has shed thousands of mining jobs this year after global commodities prices tumbled, and analysts say further retrenchment is likely.
Investing in this unstable country has never been for the faint hearted, but while mineral prices were high many firms were willing to take the risk. That may no longer be the case for the world’s big mining companies as the commodities slump forces them to slash costs globally to reduce high levels of debt.
Glencore’s Katanga copper mine, one of the biggest in Congo, announced an 18-month suspension last September, but analysts expect this could now be extended.
Australia’s Mawson West Ltd and Kazakhstan’s Eurasian Resources Group also both put mines on care and maintenance earlier this year.
Chinese companies, taking a longer-term view and keen to invest in much-needed resources for China’s economic development, are picking up some of the slack.
China Molybdenum snapped up Freeport-McMoRan’s majority stake in the Tenke copper project in Congo for $2.7 billion in May, as the American company, in order to cut debt, pulled back on what was previously seen as a strategic investment.
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