Democratic Republic Of Congo Mining Report Q2 2011

Published : April 2011
No. of Pages : 46

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We forecast impressive growth in output across all of the DR Congo's main mining sub-sectors of copper, cobalt and gold over the 2011-2015 period. We forecast average annual growth across all metals to be around 13.7% with gold leading the way (25.7% average) followed by cobalt (13.0%) and copper (13.0%). Production of copper, the most important of these metals in terms of contribution to overall revenues, is set to nearly double between 2010 and 2015 thanks to the start of a series of new mining projects with output reaching 695ktpa (thousand tonnes per annum) by 2015.
Copper Expansion to Boost Mining Revenues
Tiger Resources' recent announcement of plans to develop the Kipoi mine underlines our bullish forecast for the DR Congo's copper sector. Tiger Resources plans to produce 50ktpa from the mine in 2013. This comes on the back of recent announcements stating that Katanga Mining's Kamoto mine will produce 145ktpa by 2012 and output at Freeport's Tenke-Fungurume mine is estimated at 115ktpa in 2014.
Taking these dynamics into account we forecast an annual average growth rate of 11.2% from 2011-2015, with production reaching 695ktpa at the end of the forecast period. Looking further ahead, Ivanhoe Mines recently announced the discovery of two 'Tier 1' copper deposits in the DRC and South Africa, both containing large high grade reserves. As yet they have not stated output figures but this project could provide a further boon to copper production in the country.
Regulatory Environment
Despite an increase in foreign operators in the DRC recent years, the relationship between the government and overseas miners has proved challenging. Some companies remain in dispute with the authorities, notably First Quantum, which in September 2010 saw two exploration licenses removed by the government due to 'unreasonable behaviour' in the last three years of negotiations. The attitude of the government to cancel mining licenses on such highly subjective grounds with little or no notice highlights the risks involved in working in the Congo's mining sector. The withdrawal of First Quantum's exploration permit has led to the initiation of legal action against the Congolese government but it appears that a resolution to the dispute is still a long way off.
The recent events regarding First Quantum illustrate the difficulties facing market orientation which add to existing challenges arising from a chronic underinvestment in infrastructure, as well as instability in the east of the country. These factors account for the low Business Environment rating and demonstrate the obstacles the DRC faces in providing a business friendly environment. The picture is further unsettled by the continuing political instability as the government's authority does not extend far beyond the capital Kinshasa. The elections in 2011 will provide a significant test for the country's unity, especially given its divisions along regional lines. Unless there is a dramatic change in the Congo's fortunes, the country is likely to remain at the bottom of ratings for the foreseeable future.
Key Players
Anvil Mining is a leading copper miner in the DRC, with three facilities at Dikulushi, Mutoshi and Kinsevere. Mutoshi and Dikulushi have been on care and maintenance since Q308 and Q408 respectively, with the company choosing to concentrate on developing Kinsevere. First Quantum Mining is a Canadian company engaged in mineral exploration, development and mining across Africa. It currently has operations in DR Congo, Mauritania, Australia and Zambia. Greenock Resources (formerly known as Simberi Mining Corporation) is a Canadian international mineral development company that focuses on early to mid-stage properties that have a high potential for near-term production. Its primary project is the Kakanda copper/cobalt project in DR Congo. It also has other properties in Australia.

Executive Summary ........................................................................................................................................ 5
Global Mining Outlook .................................................................................................................................... 7
Table: Companies’ Revenue And Profits, 2010..................................................................................................................................................... 8
Table: Other Key Developments ........................................................................................................................................................................... 9
Table: Rare Earth Projects ................................................................................................................................................................................. 10
Table: Other Developments ................................................................................................................................................................................ 11
Industry Trends And Developments ............................................................................................................ 12
Table: Mining Industry Value, 2008 -2015 ......................................................................................................................................................... 13
Africa Business Environment Ratings ......................................................................................................... 14
Table: Africa Business Environment Ratings ...................................................................................................................................................... 14
Industry Forecast .......................................................................................................................................... 17
Copper ................................................................................................................................................................................................................ 17
Table: Largest Expansion Plans ......................................................................................................................................................................... 18
Table: Copper Production, 2008-2015 ............................................................................................................................................................... 18
Cobalt ................................................................................................................................................................................................................. 18
Table: Largest Development Projects ................................................................................................................................................................. 19
Table: Cobalt Production, 2000-2015 ................................................................................................................................................................ 20
Gold .................................................................................................................................................................................................................... 20
Table: Largest Development Projects ................................................................................................................................................................. 21
Table: Gold Production, 2008-2015 ................................................................................................................................................................... 22
Iron Ore .............................................................................................................................................................................................................. 22
Table: Largest Expansion Plans ......................................................................................................................................................................... 23
Regulatory Development ............................................................................................................................... 24
Competitive Landscape ................................................................................................................................ 26
Table: Key Players In DR Congo's Mining Industry ........................................................................................................................................... 26
Company Monitor .......................................................................................................................................... 28
Anvil Mining ....................................................................................................................................................................................................... 28
First Quantum Minerals ..................................................................................................................................................................................... 29
Greenock Resources ........................................................................................................................................................................................... 31
Commodities Forecast .................................................................................................................................. 32
Aluminium........................................................................................................................................................................................................... 32
Copper ................................................................................................................................................................................................................ 32
Lead .................................................................................................................................................................................................................... 33
Nickel .................................................................................................................................................................................................................. 34
Tin....................................................................................................................................................................................................................... 35
Zinc ..................................................................................................................................................................................................................... 35
Gold .................................................................................................................................................................................................................... 36
Global Assumptions ..................................................................................................................................... 38
Table: Global Assumptions, 2009-2015 .............................................................................................................................................................. 38
Table: Regional Real GDP Growth, 2010-2013 (% change y-o-y) ...................................................................................................................... 39
Table: Selected Exchange Rates, 2010-2013 (average) ...................................................................................................................................... 39
Developed States ................................................................................................................................................................................................. 40
Table: Developed States’ GDP Growth, 2010-2013 (% change y-o-y) ................................................................................................................ 40
Emerging Markets .............................................................................................................................................................................................. 41
Table: Emerging Market’s GDP Growth, 2010-2013 (% change y-o-y) .............................................................................................................. 42
Consensus Forecasts........................................................................................................................................................................................... 43
Table: Consensus Forecasts, 2011 And 2012 ..................................................................................................................................................... 43
Business Environment Ratings Methodology............................................................................................. 44
Table: Mining Business Environment Indicators ................................................................................................................................................ 45
Table: Weighting Of Components ....................................................................................................................................................................... 46

Democratic Republic Of Congo Mining Report Q2 2011

Published By: Business Monitor International

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