To­mor­row is an­other day

It’s risky, but get­ting in early can pay div­i­dends

Finweek English Edition - - Companies & markets - DAVID MCKAY

KEN­NETH MACLEOD IS THE vice pres­i­dent of a min­ing con­tract­ing firm that moved into the Demo­cratic Repub­lic of Congo (DRC) nine years ago. That was in 1999, a year into the civil war that has been dubbed Africa’s World War ow­ing to the scale of dev­as­ta­tion. Now, how­ever, Macleod’s com­pany – MCK (Min­ing Com­pany of Katanga) – is one of the largest con­trac­tors in the DRC’s south­ern­most Katanga prov­ince ex­pected to at­tract $50bn (R354bn) in var­i­ous in­vest­ments over the next few years.

One won­ders whether Greg Hunter, CEO of Cen­tral African Gold, will have sim­i­lar brav­ery re­warded. Speak­ing at the an­nounce­ment of a $6,2m (R44m) in­vest­ment in two Zim­bab­wean gold mines last week, Hunter said:

“A year ago, the DRC was not the flavour of the month for any­body. Right now any­thing that smells of the DRC is seen as very at­trac­tive. We saw the same thing hap­pen in Mali and Tan­za­nia. We’re pretty con­vinced that over time, as Zim­babwe comes right, it will be the same sit­u­a­tion.”

There’s more ex­po­sure to the DRC on the JSE than most in­vestors would ini­tially ex­pect. TEAL Ex­plo­ration & Min­ing, Me­torex, BHP Bil­li­ton, Mve­laphanda Re­sources, An­gloGold Ashanti and An­glo Amer­i­can (through De Beers) all have ex­po­sure to the min­ing and re­sources po­ten­tial in the DRC. And there are a host of oth­ers such as Nikanor and Uramin, seek­ing out prospects there.

But the chal­lenges are sim­ply enor­mous. Larry Tread­gold, the chief met­al­lur­gist for Nikanor, the AIM-listed firm, says that set­ting foot on the Kol­wezi mine, which con­sti­tutes the ma­jor­ity of Nikanor’s R9,4bn ($1,3bn) in­vest­ment in the DRC, was a ma­jor eye-opener. “Get­ting to the Til­wezembe mine (an op­er­a­tion Nikanor has re­cently opened) could take more than an hour. The roads were com­pletely im­pass­able. Now it takes 25 min­utes.”

Try­ing to fit a de­scrip­tion of just how de­graded the min­ing as­sets of the DRC have be­come is a dif­fi­cult mat­ter. Rust and di­lap­i­da­tion are ev­ery­where.

Nikanor’s main mine, known as KOV, is a vast, ex­ist­ing open pit com­pletely flooded. Eight pumps are cur­rently send­ing 12 000cu m an hour out of the mine.

On the nearby Kananga mine, a gi­gan­tic mo­bile con­veyor sits rusted on its trac­tor. It op­er­ated for a mere three months be­fore be­ing shut down in 2000 af­ter funds earned by the mine were di­verted to the civil war.

The DRC’s Katanga prov­ince, where Me­torex is de­vel­op­ing its Ruashi mine, pro­duced nearly a third of the world’s cop­per dur­ing the Eight­ies. There’s hope it can do so again.

Africa’s largest swim­ming pool. The KOV pit

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.