Lack of elec­tric­ity hin­der­ing min­ing in Demo­cratic Re­pub­lic of the Congo

The China Post - - BUSINESS - BY LU­CIEN KAHOZI

The min­er­als in the south­east­ern Katanga re­gion rep­re­sent po­ten­tial riches for the Demo­cratic Re­pub­lic of the Congo, but a lack of elec­tric­ity is pre­vent­ing the coun­try from fully ex­ploit­ing them.

In Katanga’s re­gional cap­i­tal Lubum­bashi, power cuts regularly shut down the fur­nace at the STL fac­tory that ex­tracts cobalt, cop­per and zinc ox­ide from a nearby moun­tain of slag. It takes 34 megawatts of elec­tric­ity for the site’s gi­ant fur­nace to op­er­ate at full ca­pac­ity, but DR Congo’s na­tional power com­pany Snel is only sup­ply­ing 24 megawatts.

“We are liv­ing in a sit­u­a­tion of con­tin­ual stress and it’s hell,” said Jean-Pol Tav­ernier, STL’s main­te­nance di­rec­tor.

Worse still, ac­cord­ing to Tav­ernier, are the out­ages that dis­rupt pro­duc­tion, some­times sev­eral times a day, for up to seven hours.

“Elec­tric­ity be­gan to be­come a prob­lem dur­ing the min­ing boom of 2006-2007,” said Tav­ernier. “It kept on get­ting worse un­til be­com­ing re­ally cat­a­strophic in 2012.”

The lack of power has even forced Chi­nese com­pany CDM to cut 300 jobs.

“We can’t work with the lit­tle power we have,” said CDM’s di­rec­tor in Katanga, Ak­ili Peter. “This is what forced us to shut down the four fur­naces and lay off all those peo­ple work­ing with us.”

Lacks about 600 Megawatts

DR Congo’s min­ing sec­tor had been en­joy­ing a re­nais­sance amid an in­flux of for­eign in­vestors and high com­mod­ity prices.

The state- owned sec­tor had suf­fered from un­der-in­vest­ment and mis­man­age­ment dur­ing the dic­ta­tor­ship of Mobutu Sese Seko from 1965 to 1997, only to be thrown into tu­mult dur­ing five years of war that fol­lowed his ouster.

But a new min­ing code adopted in 2002 brought im­prove­ment to the sec­tor by at­tract­ing for­eign in­vest­ment to boost pro­duc­tion with low­ered tax rates. That ac­tiv­ity and Katanga’s fab­u­lous de­posits have made the DR Congo a top pro­ducer of cobalt — a me­tal used to make al­loys prized by the high-tech in­dus­try — and a ma­jor pro­ducer of cop­per.

The gov­ern­ment is ea­ger to pro­mote fur­ther ex­pan­sion of the min­ing sec­tor to spur the over­all de­vel­op­ment of the coun­try, which de­spite over seven per­cent of av­er­age an­nual growth in re­cent years is still ranked among the world’s least-de­vel­oped na­tions.

But Kin­shasa has also pro­posed a con­tested re­form of the min­ing code in­volv­ing higher taxes for for­eign in­vestors that ac­tors in the sec­tor warn will fur­ther brake ac­tiv­ity al­ready stymied by the elec­tric­ity short­age.

DR Congo’s min­ing sec­tor lacks about 600 megawatts of elec­tric­ity ac­cord­ing to Ben Mu­nanga, di­rec­tor of energy and in­fra­struc­ture at the Kazakh group ENRC, and who deals with min­ing energy is­sues on the coun­try’s Cham­ber of Busi­ness.

The prob­lem is that the age and poor main­te­nance of its power sta­tions do not al­low state-owned Snel to meet elec­tric­ity de­mands.

In 2013 it gen­er­ated about 1,500 megawatts of elec­tric­ity de­spite an in­stalled ca­pac­ity of nearly 2,450 megawatts, ac­cord­ing to its web­site.

‘Need new pro­duc­tion’

The head of the Snel’s grid in Katanga, Jean Marie Mu­tombo Ngoie said the sup­ply prob­lem was just tem­po­rary.

“We think that within a year we’ll be able to in­crease power...” he said, cit­ing ren­o­va­tion of power sta­tions that serve min­ing com­pa­nies as a rea­son for his op­ti­mism.

But Mu­nanga also noted “that won’t ab­sorb all of the deficit. You need new pro­duc­tion, that is the press­ing need.”

The prob­lem of in­suf­fi­cient elec­tri­cal sup­plies isn’t ex­clu­sive to DR Congo. Reg­u­lar power out­ages in South Africa led of­fi­cials there to warn in May that short­ages have sig­nif­i­cantly un­der­mined eco­nomic growth. Even worse energy de­fi­cien­cies be­set cities else­where across the con­ti­nent.

Await­ing en­dur­ing so­lu­tions some min­ing com­pa­nies in DR Congo are in­stalling gen­er­a­tors to al­le­vi­ate their power prob­lems, while oth­ers im­port elec­tric­ity from Zam­bia — both ex­pen­sive op­tions.

The cost of lost pro­duc­tion also steep.

Mu­nanga said cop­per out­put — which topped one mil­lion tonnes in 2014 — could be in­creased by 250,000 to 300,000 tonnes per year with more power.

DR Congo is faced with “hor­ri­ble energy in­se­cu­rity,” said a source close to the gov­ern­ment who re­quested anonymity as he warned “in the short term, the sit­u­a­tion risks wors­en­ing” for the min­ing sec­tor.

In par­tial re­sponse to that, the gov­ern­ment is­sued a de­cree in April ex­on­er­at­ing min­ing com­pa­nies for four years from cus­toms du­ties and sales tax on im­ported elec­tric­ity and for­eign equip­ment pur­chased to gen­er­ate power.

While the min­ing com­pa­nies ap­pre­ci­ate that ges­ture, one ex­ec­u­tive said wryly that this shows “they don’t have any real so­lu­tion dur­ing the next four years.”

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