The decreasing price of metals is deeply affecting several African mines despite constant supply. Production is clearly not the problem, though several factors continue to threaten Congo’s mining sector that produced half of the world’s cobalt last year.
It is not looking fairly well for the Democratic Republic of Congo, whose economy depends heavily on mining. Decreasing metal prices, as well as impending tax increases and unavoidable power, cuts deeply in the country’s production outlook despite the consistency of mining output. The Chamber of Mines at the Federation des Entreprises du Congo (FEC) stated, through an e-mail report, what the mining sector plans to do about these constant threats.
“Exploration projects are being wound down or halted, assets are being sold off and vigorous efforts are under way to cut production costs. This is certain to result in direct and indirect job losses as suppliers and contractors are squeezed,” stated the Chamber in the e-mail as reported by Bloomberg.
The downgrade in the mining sector came as a surprise, especially after first quarter reports signifying a 15 percent increase in copper production from the same period last year. Cobalt supply also increased to 17 percent, while gold output reached a 37 percent increase.
Congo’s mining sector has been extending its efforts to reverse the effects of global price slumps by trying to prevent the revision of the 2002 mining code. The revision entails increased mineral royalties, taxes, and limited tax exemptions. Martin Kabwelulu, the minister of Congolese Mines, stated that no date has been set for the legislative debate on the revisions though it was originally scheduled in June.
FEC thinks that the said revisions came at a critical time, and that the new rules will have “dramatic consequences for the future.” On the other hand, the government firmly believes that the mining code revisions will benefit the mining industry that was nearly ravaged due to a series of wars that finally ended in 2003.
Meanwhile, Zijin Mining Group Co., a state-owned corporation in Shanghai, is looking to spend $710 million in buying mines in the Democratic Republic of Congo and Papua New Guinea to extend its business in other parts of the world. Zijin has agreed to purchase 49.5 percent of Congo’s Ivanhoe Mines Ltd. Kamoa copper project for $412 million. The purchase came at the right time since Ivanhoe’s shares recently increased as much as 17 percent.
While Congo, a leading source of cobalt, is experiencing a downfall in its mining sector, another source of the mineral in Russia is looking at a bright future. Amur Minerals Corporation (OTC:AMMCF) is a developing mine in the Amur Oblast region working on its nickel and copper project situated in its Kun-Manie deposit. The deposit also has economic amounts of cobalt, platinum, and palladium.
Now that the company has secured the appropriate mining license from Russian Prime Minister Dmitry Medvedev, Amur is on its way to produce 841,000 tons of nickel and copper from the site.