Bloomberg News Feature

Congo Miners Demand Power Reforms as Copper Output Declines

by Thomas Wilson and Franz Wild

February 10, 2016, 1:54 AM EST February 10, 2016, 4:09 AM EST

  • Copper production fell 3% last year on power outages, prices

  • Electricity shortage grew to 950 megawatts from 542 megawatts

The Chamber of Mines in the Democratic Republic of Congo called for radical reforms in the country’s power industry after disrupted electricity supplies and lower copper prices reduced output in Africa’s biggest producer of the metal.

Copper production dropped 3 percent to 995,805 metric tons in 2015, the first time annual output dropped since 2009, the Chamber of Mines at the Federation des Entreprises du Congo said in an annual report distributed Wednesday in Cape Town. Output in the fourth quarter slumped 12 percent from the previous year, it said.

"Inadequate and highly non-transparent management by state-owned electricity supply company SNEL is the single biggest factor inhibiting the development of the mining industry" the chamber said. The shortage of electricity in Congo grew to 950 megawatts in 2015 from 542 megawatts a year earlier, Eric Monga, the head of the Katangan branch of Congo’s Chamber of Commerce, said at a conference in Cape Town on Wednesday.

Since 2012, inadequate power supply has required copper miners to import electricity from neighboring Zambia or invest in expensive diesel-powered generators, increasing operating costs at a time when metal prices are falling. In response, Baar, Switzerland-based Glencore Plc in September suspended production at its Katanga Mining operation for 1 1/2 years to build new processing facilities that it said will cut output costs.

Decaying Infrastructure

Congo has installed electricity-generating capacity of 2,442 megawatts. Underinvestment in infrastructure has seen output decline as facilities fell into disrepair, with generation declining to 1,329 megawatts in 2014, FEC data shows. The country is also the world’s largest source of cobalt and a producer of metals including gold and tin. Gold and cobalt output both increased last year.

The chamber said privatization of the power industry is required for the shortfall to be addressed. “Potential investors in the energy sector do not have the slightest confidence in the existing structure,” it said. A 2014 electricity law provides for the liberalization of the sector dominated by Societe Nationale d’Electricite, the state-owned utility, though progress has been slow.

The chamber also criticized tax legislation that rewards government officials who enforce a tax penalty with a percentage of the fine imposed. “The system has become such that officials are more committed to obtaining penalties than applying the normal tax rules,” it said.

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Bloomberg News Feature

Congo Businessman Plans Hydropower Plants to Help Copper Miners

by Thomas Wilson

December 9, 2015, 12:00 AM EST

  • Power shortage reducing copper output by 50,000 tons a year

  • Privately developed power plant would be country's first

A Congolese businessman plans to develop a hydropower project in southeastern Democratic Republic of Congo to supply electricity to the region’s mines. By doing so he would establish a new model for electricity projects in the country.

Africa’s biggest copper producer is almost the size of Western Europe, though it only has installed power-generating capacity of 2,442 megawatts -- about the same as Panama’s. Only half that capacity is functioning.

Eric Monga, regional head of the Federation des Entreprises du Congo, a business lobby group known as the FEC, signed a memorandum of understanding with the Congolese government in September for the development of two sites in Haut-Katanga province. Most of the 1 million metric tons of copper the country produces comes from the southeastern region, which was previously known as Katanga.

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