Contract reviews in copper-rich DRC

A government mining contract review and tumbling copper prices have done nothing to deter Perthbased Tiger Resources from its focus on the Democratic Republic of Congo.

The former Belgian colony was named Democratic Republic of the Congo (DRC) in 1964 to distinguish it from the neighbouring Republic of the Congo.

It is the world’s largest producer of cobalt, and a significant producer of copper and industrial diamonds, although revenue and production have been affected by ongoing civil unrest, including the two Congo wars, which began in 1996.

Perth-based Tiger Resources began drilling in January 2007 and has its flagship Kipoi Copper-Cobalt mine in the southern province of Katanga, in a joint venture with Congo Minerals.

Tiger’s managing director, David Young, said although the country could be unstable, a comprehensive peace deal, brokered by the United Nations in January this year has brought an end to conflict in the eastern region.

Mr Young said the DRC government is addressing this issue through diplomacy and the United Nation’s was very supportive.

“The government and the United Nations understand that if the DRC could realise its huge potential it could fuel the whole economy because it is an incredibly mineral rich region,” Mr Young said.

The International Monetary Fund and World Bank have helped the government develop a coherent economic plan, and DRC President Joseph Kabila has begun implementing reforms.

In late 2007, the DRC government established a commission to review the state interests in various mining projects in a bid to bring transparency to deals struck during wartime, between 1998 and 2003.

Overall, 60 mining contracts were reviewed, including those involving Perth-based Tiger Resources, Anvil Mining and Elemental Minerals, as well as mining giant BHP Billiton.

Junior explorer Elemental Minerals retained its right to explore at the Kasai gold project, which is held on a 60:40 basis with a state-owned company MIBA, however its joint venture contractual arrangements are to be reassessed.

Uncertainty remains over Anvil Mining’s copper-silver Dikulushi mine and Kinsevere and Kulu copper mines, with Anvil shares falling 75 cents last month as the company confirmed the DRC government was reviewing all three mines.

The government wants contracts, predating the current mining code, transferred and altered to reflect changes in metal prices.

Mr Young said that, in trying to put proper processes in place, the government’s review sent a good message globally, which would make the DRC increasingly attractive for companies seeking copper.

“The Katanga copper belt in the south is the most prolific and highest grade copper belt in the world, and from a resource point of view the probability of discovering a world class project is high,” he said.

In October 2007, BHP Billiton agreed to fund the feasibility study for Inga III hydro power project, signing an agreement with DRC government to jointly investigate the development of a world-class smelter.

“Eventually the Inga III hydro power project will be able to deliver excess power to the DRC that is clean, cheap and reliable, attracting even more resource development, particularly in the southern Katanga province,” Mr Young said.

He said the distance to supply lines was an issue but the Katanga province had good infrastructure, a high voltage power supply line, a paved highway, an international airport and a railway line.