Tomorrow is another day
It’s risky, but getting in early can pay dividends
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