CAPE TOWN () -- Hard on the heels of Minister of Mines Victor Kasongo's on returns allowed on projects in the Democratic Republic of Congo (DRC) and the revision of all existing mining contracts, speakers at in Cape Town on 6 February were remarkably silent on the political threat.
Across the road from the conference centre, Kasongo was facing several hundred analysts, miners and investors trying to downplay his threats of the previous day. And people were, to put it mildly, irritated as millions were wiped off the stocks of mining companies with Congolese interests.
Nevertheless, several speakers at the conference itself were up-beat in their reports on copper and cobalt mining projects in Katanga province, arguably the world's richest and most-prospective copper/cobalt mineral endowment. And they all emphasised the social responsibility projects in which they are engaged and which contribute to social and educational upliftment in a country where these issues have been neglected in the tumultuous decades since independence.
Lundin Mining's [NYSE:LMC; TSX:LUN] Paul Conibear described the Tenke Fungurume mine in which Lundin has a 24.75% equity interest as "remarkable". Where else can you find a 235 million-tonne of measured and indicated reserves grading 3% copper and 0.3% cobalt? To that should be added the 264 million tons resource grading much the same copper and cobalt.
Now the company has a mine in development with a life of at least 40 years, mostly open pit and which, Conibear told delegates, will operate for the first 10 years after start-up in 2009 at an average copper grade of 4.57% and cobalt of 0.4%. Initially, Tenke is slated to produce an annual 115,000 tonnes of copper and 8,000 tonnes of cobalt. But the aim is an annual copper production of 400,000 tonnes.
Tenke Fungurume has been known for several decades, but was left unexploited because of the years of civil war which plagued the Congo. Now, Lundin's partners are Freeport-McMoran [NYSE:FCX], which has 57.75% of Tenke, and Gecamines (the Congolese state company), which has 17.5%.
Gecamines has a free ride, while Freeport and Lundin split the capital cost of Tenke on a 70-30 basis.
Conibear said that Tenke was served by infrastructure that is relatively good "by DRC standards". Certainly, the DRC has an enormous latent hydro power generating capacity and metal can reach the ports of Lobito and Dar es Salaam by road and rail, but this is "expensive".
First Quantum Minerals' [TSC:FM] Clive Newell was equally as positive about his company's Congolese operations. First Quantum's reputation, Newell told delegates, is built on the company's ability to build mines at costs well below industry norms.
The company's current focus is largely on operations in Zambia, though there are projects in the DRC and Mauritania that are at less-advanced stages. In the DRC, the Frontier copper mine is located right on the border with Zambia and can draw on cross-border facilities. And the ore body of the veteran Zambian Bwana Mkubwe copper mine which is reaching the end of its productive life has now been shown to extend across the border into the DRC. Negotiations are in progress to allow First Quantum to mine the cross-border ore.
But as Newell pointed out, working in the DRC is not easy with skills shortages, poor infrastructure, power supply problems, long lead times for delivery of capital items, inflation and local politics.
There are risks as well as rewards.
Anvil Mining's [TSX:ANM] Bill Turner said he was relaxed about Congolese politics. Anvil was among the early companies into the country, with early-bird advantages. But he, too, spent considerable time describing Anvil's social projects.
There may be problems n the DRC, but Turner pointed out that over the past five years Anvil has brought three copper mines into operation in what he said were "reasonably challenging conditions".
The attractions of the DRC were, however, underscored by Katanga Mining's [TSX:KAT] Arthur Ditto. Since its January 2008 merger with Nikanor, Katanga has been able to assemble one of the world's largest copper/cobalt resources. The aim at the Kamoto mine is to be producing an annual 300,000 tonnes of copper and 30,000 tonnes of cobalt, Ditto told conference delegates.
But Turner, too, made no secret of the difficulties of operating in the DRC : infrastructure deficits, a "lost generation", power problems, transport and poor availability of even some of the simplest products such as cement.
It's not easy doing business in the DRC; it is not without a number of risks. The rewards should be commensurate, even if minister Kasongo sees it otherwise.