Ex-mine regulator seeks to be tin producer
Five years after Victor Kasongo quit his job regulating mining companies as a deputy minister in the Democratic Republic of Congo, he’s seeking to become the country’s sole producer of pure tin.
South Africa’s Nedbank Ltd, First Bank of Nigeria Ltd and Gabon’s Groupe BGFIBank have together offered Kasongo’s Congo Premier Sarl a US$20 million loan. That will allow him to buy machinery to mechanise his mining operation near Congo’s eastern town of Kisangani and supply his revived furnaces with ore faster, Kasongo said in a Feb 11 interview in Cape Town.
To activate the loan, Kasongo said he met with executives from Malaysia Smelting Corp Bhd, the world’s second-largest tin producer, so they would agree to buy the 190 metric tonnes of tin he plans to produce each month. He also held talks with the chairman from a major producer of tantalum to buy the tin-ore mining byproduct that’s used for energy-storing capacitors in cell phones. He declined to identify the company.
“I need an off-take agreement to make sure I get the money,” Kasongo, 52, said while reclining in a white leather sofa beside the exhibition stalls of Rio Tinto Group, Bollore SA and Caterpillar Inc at the Investing in African Mining Indaba conference. “I’ll be the first to produce pure tin metal in Congo.”
Congo’s copper, cobalt, diamond, gold and tin deposits have attracted some of the biggest mining companies in the world, including Glencore Plc and Freeport-McMoRan Inc. As a local mine boss with a processing plant, Kasongo is an exception. Hand-mining
Production of cassiterite, a type of tin ore, rose 42 per cent to 10,756 tonnes last year, according to Congo’s Chamber of Mines. At an assumed tin content of 60 per cent, that amounts to 6,454 tonnes of tin, according to ITRI Ltd, the St. Albans, England-based tin industry body.
Most of the ore is still extracted by men using picks and chisels from hand-dug tunnels in the country’s east. Congo is the world’s fifth-biggest tin ore producer, according to ITRI.
Kasongo bought an old furnace in 2011, imported a second from South Africa, and is seeking admission to ITRI. The industry body will need to check that his product meets the 99.85 per cent purity standard required to trade on the London Metal Exchange.
He’ll also need to f ulfill a number of certification steps designed to ensure his products didn’t originate from a mine controlled by one of Congo’s many armed groups.
With a navy suit, purple tie, ankle-high black boots and a pencil-line mustache, Kasongo resembles the bankers and lawyers more than the often casually dressed engineers and geologists who shuffle through the mining conference. Long way
His sales pitch is still harder than most. With 2,500 kilometers (1,553 miles) between his plant in Kisangani and the Kenyan port of Mombasa, the logistics are daunting. It takes five days to truck Congo Premier’s tin to the coast for shipping.
One day, Kasongo hopes to let boats ferry it down the Congo River to the port of Matadi on the Atlantic Ocean, though there aren’t enough vessels for the job yet.
“It’s very hard to get money into Congo,” Kasongo said. “The cost of mining there is so high.”
The many layers of government bureaucracy compound Kasongo’s operational difficulties, he said. It’s difficult to get officials to deal quickly with the documentation needed to import equipment, obtain operating licenses or
export metal, he said. Underestimated difficulties
“It’s frustrating,” said Kasongo. “Sometimes they are slow. But they come to you when it comes to paying taxes. The challenges businesses face, like power, roads and customs are ones I underestimated when I was in government.”
The World Bank ranked Congo 184 out of 189 economies in its 2015 Doing Business index, though it also cited it as one of the top 10 countries that have made it easier to start a business.
Mines Minister Martin Kabwelulu declined three requests for an interview during the Indaba and didn’t respond to a phone call and text message seeking comment.
The irony of going from government to the private sector is not lost on Kasongo. He laughs that most people he meets still remember him from his 2007 to 2010 stint as deputy mines minister, where he was a key figure in the government’s review of mining contracts. Giant’s shadow
At the Indaba, mining executives listened to keynote speeches from Canadian billionaire Robert Friedland, former UK Prime Minister Tony Blair and former Goldman Sachs Asset Management’s former chairman Jim O’Neill. They sat through presentations by African ministers touting their nations as investment destinations, before rushing over to the politicians to squeeze a business card into their hand.
“It’s hard work standing next to all the massive companies,” said Kasongo. “Without a track record it’s almost impossible to do business.”
With average minerals and metals prices close to a 12-year low, according to the Bloomberg Commodity Index, it’s even harder than usual for smaller operators to win investment for their projects. Waning demand for raw materials is forcing mining companies to reduce spending by US$20 billion this year, Macquarie Group Ltd. said in a report.
Luckily for Kasongo, tin’s price slump isn’t as bad as it is for some other metals. At US$18,000 per metric tonne its close to its lowest since August 2012. — Bloomberg