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Follow on Google News | New Market Research Report: Congo, Dem. Rep. Mining Report Q3 2010New Materials market report from Business Monitor International: "Congo, Dem. Rep. Mining Report Q3 2010"
The long running dispute between the Congolese government and Canadian miner First Quantum Minerals worsened in May 2010, when the country's Supreme Court annulled First Quantum's rights to the Frontier and Lonshi copper mines and awarded them to state miner Sodimico. Sodimico had alleged that the permits to Frontier and Lonshi were 'illegally' awarded in 2000 and 2001. First Quantum has attacked the decision, describing it as 'retaliation' for First Quantum's ongoing arbitration concerning its US$550mn Kolwezi tailing project, which was cancelled by DR Congo during 2009. The company has also vowed to defend these latest mine right annulments. In 2009, Frontier was DR Congo's biggest copper mine, producing some 94.000 tonnes. This latest development is clearly a negative for the reputation of the DR Congo's business environment and will be watched closely by other foreign investors as to how the situation develops over the coming months. With these latest annulments, DR Congo has seized mining assets worth over US$1bn to First Quantum, so clearly a swift resolution to this dispute would be welcome. There appears to be better news surrounding the ongoing contract negotiations between DR Congo and Freeport McMoran over a planned expansion to the latter's US$900mn Tenke Fungurume copper-cobalt mine. Speaking to Reuters in March 2010, Freeport CEO Richard Adkerson said that his company was close to agreement with the government, although no final agreement had been signed as this report went to press. Copper and cobalt outlook appears bright A leaked government forecast obtained by Reuters in April 2010 was upbeat on the outlook for copper and cobalt production in DR Congo over the coming two years, as higher production from Tenke Fungurume filters through into higher output levels for the country as a whole. The forecast calls for copper output to increase from an estimated 409,935 tonnes in 2010 to 851,608 tonnes in 2012. At the same time, cobalt output is forecast to increase from an estimated 39,327 tonnes in 2010 to 91.355 tonnes in 2012. In light of this leaked memo, we have made some upwards revisions to our copper and cobalt production forecasts. However, we would stress that this bullish outcome will only be achieved if ongoing contract disputes within the copper and cobalt sector do not have a deleterious impact on Congolese mine output in the years to come. New Data For 2010, BMI has made significant changes to the way in which we forecast mining data. As well as using local statistics agencies and associations, we now also draw on the expertise of the UN's Industrial Commodity Statistics Database, the US Geological Survey and the World Bureau of Metal Statistics for our historical export and production data. We then forecast this data using our own proprietary econometric model. Human intervention also plays a necessary and desirable role in our mining forecasting; Country Overview The Democratic Republic of Congo (DRC) is home to vast reserves of a wide variety of natural resources such as cobalt, copper, gold and diamonds. DRC is believed to contain about 4% of the world's copper reserves and one-third of its cobalt reserves. All mineral deposits in the DRC are state-owned and the holder of mining rights also gains ownership of the mineral products for sale. Governed by the National Mining Code, the Ministry of Mines regulates the Mining Registry, Directorate of Mines and the Geological Directorate. The country is the world's second largest diamond exporter by volume and the fifth-largest producer. Industry Forecast DR Congo is in the process of developing its rich mineral endowments of cobalt, diamonds, copper and gold. Although the DRC has great potential in mining-related activity, political instability needs to be tackled urgently to ensure that the growth opportunity is not lost. BMI believes that the Congolese mining sector can reach an average annual growth rate of between 4.7% across our forecast period. Many new mining facilities are scheduled to start production in 2010-11, which should boost output levels. However, we would caution that our forecasts remain dependent on relative political stability within the African state. For more information or to purchase this report, go to: - http://www.fastmr.com/ About Business Monitor International Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at http://www.fastmr.com/ About Fast Market Research Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156. End
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