Where others fear to tread
The traditional difficulties of investing in the Democratic Republic of Congo (DRC) have not fazed Chinese investors, ever keen to take a greater slice. State-run firm CITIC agreed in June to buy a 20% stake of Ivanhoe Mines, which is developing Africa’s largest copper deposit. CITIC was not visibly worried that Ivanhoe has been vocal about Kinshasa’s mining reforms (see below) and says it will take the government to court. With the new digital economy dependent on cobalt-powered smartphones and copper-hungry renewable energy, China sees a strategic advantage in securing mineral stocks. And, while many Western companies back away, Chinese investors are piling in, locking in supply contracts and mining equity. Glencore, for example, agreed in March to sell a third of its cobalt output to Chinese battery maker GEM.
There may be trouble ahead. Some of the miners involved may pretend they will not litigate… We’ll just face the music and dance, suggests mining minister Martin Kabwelulu. “The code will be applied as it was promulgated!”, he barked at Reuters in a text message. Tax hikes for several big mining houses are now due after the code was signed by Prime Minister Bruno Tshibala on 15 June. We hear the lawyers are sharpening their quills as we speak, with traditional handwringing about ‘economic nationalism’ coming to the fore. South African miner Randgold leads the fightback against the changes to the mining code, which industry players say will reduce foreign investment in the sector as the government gets a bigger take.
Disrupting lucrative networks
A few thousand kilometres to the east, other miners are also under pressure. Morocco’s phosphate mining and fertiliser giant OCP has disrupted the Kenyan fertiliser import barons with a much cheaper product. But the barons are pushing back: in January, a cargo was accused of being contaminated with mercury. An insider at OCP claims this is a diversionary tactic, and that the fertiliser in question was actually created in conjunction with Kenya’s own institute of agronomic research. The cash generated from the fertiliser import business is said to run right up into the stratosphere of Kenyan political power.