December 17, 2017

DRC: The right time for exploration is now

Susa Maleba country manager SRK Consulting in the DRC

With the improvements in the copper price, mining interest will soon be returning to the Democratic Republic of Congo (DRC), according to SRK Consulting country manager, Susa Maleba.

In fact, said Maleba, for explorers wanting to initiate drilling programmes, time is running out.

“Drilling companies in the mining areas of DRC still have capacity and are looking for work, and even the assay laboratories are not too busy,” he said. “When the tide turns and the rush begins, however, it will become more difficult to find contractors and everything will take much longer.”

He has already seen some up-tick in activity, and SRK is active with resource estimations and audits as well as environmental and social impact assessments (ESIAs) and a hydrogeological study to investigate aspects of groundwater on a local mine. ESIAs are necessary for all new projects, and DRC regulations require mining companies to review their ESIA studies every five years, or when there is any major change on the project.

SRK Consulting opened its Lubumbashi office in May 2010, and staff now comprises nine technical and four support staff. Drawing in independent scientists on an associate basis, as well as specialist expertise from SRK’s global network, the office conducts environmental, social, geological and mining studies. Its geological services include mineral exploration, resource estimation and mining geology, as well as geotechnical work (civil and mining) and water management.

“Current points of interest in DRC’s mining development include those companies whose plants were designed to treat oxide ore, and who are now looking to the future when their production from oxide deposits can be replaced with production from new sulphide reserves,” he said. “At MMG’s Kinsevere mine, for example, they have been mining copper oxide ore, and are currently busy with exploring their sulphide options. While oxide reserves are expected to sustain Kinsevere’s life-of-mine until 2024, the primary sulphide resources underlying the oxide resources at Kinsevere have the potential to extend the mine life to 2033.”

What is stalling the sector’s progress at this stage is political uncertainty, he said; once this can be resolved, a number of newcomers are expected to enter this market. There are hopes that once elections take place and the political outlook is more certain, there will be scope for certain companies to seek the finance required to return operations to previous levels. To raise such funding, an independent assessment of mineral reserve holdings will be required, and SRK has already been contracted to undertake this resource estimate for one important DRC-based miner.

Maleba highlighted the ongoing disagreements over the proposed new Mining Code, on which mining companies were engaging with government. He said while there was a Chamber of Mines that existed as part of the national Chamber of Commerce, it had been not been able to reach agreement with government on the intention to increase tax rates for mining companies. A further complication was that government had not been able to pay mining companies the VAT that they are owed.

In terms of the industry’s capacity to grow, a factor that needed to be addressed urgently was the shortage of mid-level skills in the mining sector – despite the sector’s growth over the past decade or more.

“The training of artisans and technicians could be a valuable area of collaboration between the private sector and government,” said Maleba. “In the past, Gecamines had sponsored technical schools but this has not been sustained since Gecamines ran into financial difficulties.”

He highlighted another important opportunity for mining companies to contribute more directly to share the benefits of mining at local level: through supplier development.

“A new law signed in February 2017 requires mining companies to deal with DRC companies when sub-contracting,” said Maleba. “This is one way that government is trying to promote local development around the existing mining projects.”

The challenge, he said, is that DRC companies – potential sub-contractors – do not have capital or access to funding so that they can strengthern their capacity to do business with mines. Also, many of these businesses are not equipped with the necessary skills to win those contracts.

“There is an opportunity here for mining companies to empower local businesses – especially with managerial and technical skills – so that they can become competent sub-contractors, and can start to share in the benefits that mining brings,” he said.

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