Another Government Is Attempting This Dangerous Mining Strategy

Back from Myanmar and Mongolia. To find that one of the world’s fast-growing mining trends has taken another twist this week.

As I’ve been discussing for several months, governments in mining nations globally are obsessing about “value-added” production. Demanding that miners upgrade and refine metals in-country, instead of exporting lower-value products like concentrate. 

And this week, another government got on that bandwagon. In the world’s top cobalt-producing nation: the Democratic Republic of Congo. 

Officials from that government confirmed they have directed key copper and cobalt miner Sicomines to stop exporting unfinished mineral products. With sources saying that numerous trucks carrying copper concentrate and lower-value cobalt hydroxide had been turned around en route to Zambia, where the metal is currently upgraded. 

DR Congo’s Mines Minister Martin Kabwelulu added that Sicomines will now be required to export “only high-value products”. Suggesting that the government is looking for the firm to build in-country refineries — which currently don’t exist. 

The move is an interesting one, given that Sicomines is majority-owned by Chinese firms Sinohydro Corp and China Railway Construction. Who have major political clout in the country after the Chinese government invested $6 billion in local infrastructure. 

For their part, Sicomines officials said they expect to “unblock” the export ban without any major delays. Suggesting that are not planning to comply with government demands for refinery construction.

This could lead to a showdown, like one that’s playing out now in another value-add nation: Zimbabwe. Where government officials have been threatening to impose a 15% tax on exports of unfinished platinum, as soon as January 2018.

But Zimbabwe’s government now appears to be backing down on those demands. With Finance Minister Patrick Chinamasa saying this week he may extend the deadline for in-country upgrading to take place.

That comes after the country’s largest miner Zimplats last month threatened to close its largest operation, Mimosa, if the import tax was imposed. Showing that operators are willing to stand up to demands for in-country processing, which are often seen as financially impossible, due to high costs for smelter construction. 

We’ll see if a similar detente comes in DR Congo and other embattled nations like Tanzania. Watch for more announcements from Sicomines and government officials here. 

Here’s to being realistic,

Dave Forest

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