African Mining Network

AMN was established to develop and build relationships across Africa’s mining community, and give the world a preview of what is happening in mining in Africa.

AMN - DRC shows solidarity but strong partnership needed for growth – comment by Yolanda Torrisi

Yol headshot May 2011

A number of mining companies operating in the DRC have shown tremendous fortitude and flexibility to keep operating during the COVID-19 pandemic supported by authorities who have enabled the industry to continue in recognition of the important role mining plays in the country’s economy. In order to emerge from the pandemic stronger and more prepared to overcome future difficult times when they arise, the industry and the government must work more closely together.

The efforts of mining companies to endure through the virus-imposed restriction have been recognised by DRC Chamber of Mines president Louis Watum, who is also MD of DRC operation for Ivanhoe Mines. He said recently in a virtual panel discussion: “I need to commend the entire mining industry in the DRC which has shown unprecedented solidarity to government and local communities during this pandemic.

“We see in the DRC mining operators coming together and contributing in all sorts of ways, including taking extraordinary measures to keep operations going under a strict lockdown configuration and protecting the health of their employees and not retrenching people as the government has asked.” The discussion is part of a series to be held in the lead-up to DRC Mining Week, which will take place in Lubumbashi from 7-9 October 2020.

As an example of the solidarity, Watum spoke about Ivanhoe’s Kamoa-Kakula Copper Project, saying: “If you want to see a real brave new world, come to Kamoa. As I’m speaking, we have 4500 workers working under strict lockdown, they have not seen their families for weeks and they are working underground and on the surface. They are pushing for Kamoa to get into production and tell a great story next year. We are still on target, we showed a lot of resilience and courage, so it is very good for the country and the economy and all the stakeholders.”

Watum believes it will be a case of survival of the fittest in the DRC post-COVID-19 and that this will also trigger an increase in merger and acquisition activity. He said: “I think it is going to be the survival of the fittest post-COVID-19. And who is going to be the fittest? It is those that are well-funded, with deep pockets, with less debt and with very strong management. These are the ones who will survive this challenge.

“I, therefore, see an increase in M&A activities post-COVID-19, where the big players with a lot of cash and experience will be shopping around for opportunities that have lost a lot of value and have become affordable,” he said.

Alphamin Resources and Pangea Exploration director Boris Kamstra shares that view, stating: “Mining companies’ equities have been re-set practically across the globe and that does offer one a slightly lower barrier to entry ... so absolutely our radars are out and (we) are scratching around wherever we think there may be some potential. We are great bulls on the DRC and believe wholeheartedly in its potential and are reviewing a number of possible investments that we could make.

“There are people with some severely stressed balance sheets. I think if you are an explorer or a developing project and you are not fully funded at this point I think in post-COVID-19 it is going to be quite hard to acquire that capital and those would be the kind of opportunities that we look at.”

The virtual panel also discussed the role of the government and new mining code. Kamstra said: “I think what is very important is that the government understands that we have to be ambassadors for the DRC, and in our instance, for North Kivu, long before we can even talk to people about our specific projects. When the previous mining code with its stability clause, which gave investors a degree of comfort, was changed, we were put on the back foot.

“We stand together with the government; it is in our interest that the DRC flourishes and runs very smoothly. So, this goes back to a greater need for a partnership and a great degree of trust amongst us.”

Watum agreed that the government had some work to do, saying: “I must say it takes two to tango, the DRC needs to come to the party as well. There is a strong appetite amongst investors looking for new ground for exploration in particular and beneficiation in-country, adding value, because there is a big market for that.

“We can never say it enough, but we need to root out corruption in the Congo, we need more transparency in the Congo, particularly for getting permits for exploration and so forth.

“We need stability and certainty of regulatory framework. All these are must-haves if you want to attract big investors and really create wealth. So yes, the appetite is there, but the DRC needs to make it attractive for investors.”

Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent.