DRC updates mining industry on localisation policy

Contributed by SRK Consulting

With the Democratic Republic of Congo (DRC) being a key focus of Africa’s mining sector, the Investing in African Mining Indaba in Cape Town held earlier this year provided authorities with a good opportunity to update the mining fraternity on regulatory developments.

There was particular interest at the Mining Indaba in the presentations by the Regulatory Authority for Subcontracting in the Private Sector (ARSP), according to Dominique Sambwa, geological consultant and chairman of SRK Consulting (Congo). The ARSP is a government body set up in terms of the 2017 mining law to manage the rules relating to subcontracting by the private sector.

“The subcontracting regulations require that companies serving the mining sector must be locally based and have at least 51% ownership by Congolese citizens,” said Sambwa. “The Indaba allowed the ARSP to update many foreign stakeholders on how this plan is being rolled out, and what it means for foreign-based service companies working in the DRC.”

 

Strengthening local economy

Vis Reddy, chairman of SRK Consulting (South Africa) and Africa lead for SRK Global, highlighted the importance of distributing the benefits of mining to local businesses and communities. This process strengthens the local economic ecosystem on which mining relies, while also building the local skills base and diversifying industrial activity – enhancing mining’s contribution to“It was useful for delegates to hear input directly from the ARSP Commission, including their insights into how these localisation policies had been historically implemented in other parts of the world – including Europe and the US,” said Reddy. “Mining’s socio-economic contribution to host countries has been a prevailing theme at the Indaba, and it is encouraging to see the enabling strategies now being implemented.”

 

Local presence

SRK Consulting has had an engineering consultancy practice in Lubumbashi for over a decade, managed and staffed by experienced local engineers and scientists. The practice has for some time been majority-owned by Congolese shareholders, providing valuable in-country support to mining companies. SRK Congo also operates a strategic initiative with partner practices SRK South Africa and SRK China to serve Chinese-owned mining companies.

Sambwa noted that there are new ARSP taxes provided for by legislation, which will be used partly to support the development of local companies in establishing ventures in collaboration with foreign partners. The regulations will lead to more foreign service companies looking for Congolese partners, but the lack of capital for local firms to buy into joint ventures is likely to be a factor that inhibits progress.

 

Promoting collaboration

“It is anticipated that the taxes levied by the ARSP will contribute to efforts to build the capacity of local companies to partner with outside companies,” he said. “This assists foreign investors to enter this market by working with Congolese businesses and professionals who understand the local market, opportunities, processes and general corporate culture.

” In addition to the new subcontracting regulations, he highlighted two other crucial outcomes of the 2018 DRC mining law. The one was to dedicate a portion of revenues generated by a mine to the development of local communities – by contributing to community plans for economic sustainability through initiatives in agriculture and other sectors.

Community engagement

“The other change that mining companies need to understand is the Cahier de Charge, which requires that mines engage formally and effectively with local communities when setting development priorities and implementing these initiatives,” he said. “Through our experience in the sector and our expanding services, we have been able to pioneer successful projects in this regard with our clients operating in the DRC.”

SRK Congo mining engineer and country manager Susa Maleba noted that there was also considerable scope to develop renewable energy sources in the DRC – which would help mines to reduce their carbon footprint. This potential included hydroelectric and solar power, which could be implemented on a localised basis close to mining sites. Infrastructure improvements were still required on road and rail networks to streamline supply chains and reduce the cost of doing business.

Engineering for sustainability as mining booms in DRC Now the world’s second-largest producer of copper behind Chile, the DRC is seeing considerable investment in infrastructure to support mining and other sectors. What is now vital for the country is to ‘lock in’ its progress to date and pave a sustainable way forward that fully leverages the economic spin-off of copper mining, according to Reddy. “Over the many years of our involvement with clients in the DRC, we have seen considerable developments in this market – which have gathered pace in recent years,” said Reddy. “The copper-cobalt boom is certainly tangible in many regions, and there is growing enthusiasm among investors for the opportunities here, despite the inherent risks.” He also highlighted that the DRC was a relatively young mining destination for international mining companies in terms of establishing its mining codes and regulations, and these were likely to continue evolving. As government puts the necessary frameworks in place, this is gradually strengthening the predictability of the mining landscape.   Greater certainty “This process is not simple or quick, as there are many cases where there is no precedent for new laws and rules,” he explained. “It is not always clear how certain aspects of legislation should be interpreted and applied, but over time there will be greater certainty about what is expected of investors, mining companies and other stakeholders.” Sambwa noted the positive developments in the Katanga region, where the Lobito Corridor was now open and rail transport trials have been initiated. The corridor stretches 1 300km through Angola to the Atlantic Ocean and promises to be an important route for commodities from areas like Kolwezi to the export harbour at Lobito.   Improved infrastructure “This is one of the major recent advances to underpin the future of mining in Kolwezi, adding to the new Busanga power station there which is now delivering 240MW,” said Sambwa. He noted that there were also efforts underway to improve infrastructure in newer mining areas like Manono. Here, The Mpiana-Mwanga hydropower station destroyed 25 years ago is now being refurbished to serve growing energy demand as mining activities gather momentum. “The area remains isolated, however, with about 433km of transport road needing to be built to the nearest exit port at Kalemie,” he said. “New projects in Manono, which hosts a number of exciting mineral prospects, will face infrastructural challenges for some time yet.” For more on developments in the DRC by SRK Consulting, register to receive the African Mining, incorporating Mining Mirror fortnightly bulletin here: https://www.africanmining.co.za/mining-africadigital-registration/

 

Geology The Congo Basin, made up largely of Mesozoic to Cenozoic and Recent sediments, occupies large parts of the centre and west. It is surrounded by elevated Precambrian ridges: to the west by the Atlantic Rise, to the north by the Uganda to Central African Republic mobile belts and to the south by the Kasai and northeastern Angola Shield. Tabular volcano-sedimentary deposits of Pan-African age encircle the inner margins of the basin. The southeast of the country is underlain by the Pan-African Lufilian Arc. Along the eastern part, at the border to the Western Rift of the East African Rift System, occur numerous Tertiary to Recent volcanoes and some carbonatites. Source: Dr N.C. Steenkamp

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