| KAMBOVE, Democratic Republic of Congo
KAMBOVE, Democratic Republic of Congo Feb 22 At
the heart of the Democratic Republic of Congo's southern mining
belt, Kambove once churned out tonne upon tonne of copper for
Gecamines, a sprawling conglomerate that used to make up 60
percent and more of the country's exports.
Now, inside the rust-streaked corrugated iron walls of the
Kambove copper plant, the conveyor belts run erratically and the
corroded walkways have holes so large that visitors can see
through to the workers milling below.
Today, like much of state-owned Gecamines, the processing
operations are working at a fraction of their capacity, slowly
crumbling in the searing African heat.
Kambove, however, is part of an ambitious government plan to
put state-owned Gecamines back on the map as a miner and
producer and reverse decades of underinvestment, war and
kleptocracy presided over by the late dictator Mobutu Sese Seko.
Under technocrat managers appointed in 2010 and a plan laid
out last year, Gecamines would no longer just hold minority
shares in mines across Congo's south, but aim to triple its own
production by 2015, thanks to investment in new machinery and a
push into exploration. The group last month took its first
minority stake in an asset outside Congo - cobalt refinery
assets in Finland - a move it says will help raise and improve
its bruised international profile.
"Gecamines has a great story," Chief Executive Officer Ahmed
Kalej Nkand, a former central bank official, told a room of
mining investors in Cape Town. "It is the story of a mining
giant that is awakening from its slumber."
The ambition, Gecamines executives say, is to be an African
Codelco, which is Chile's state copper miner and the world's
largest producer of the metal, producing just under 1.7 million
tonnes last year. That ambition is, at best, a very long way
off. In its 1980s heyday, Gecamines made nearly 500,000 tonnes,
but it reported only 35,000 tonnes in 2012, and its target of
100,000 tonnes in 2015 looks tough enough.
Financing is a major hurdle, at a time when the
International Monetary Fund has halted its Congolese loan
programme over mining transparency concerns, prompting questions
over Gecamines' more ambitious plans, including a 500 million
euro ($670 million) power plant fuelled by coal from deposits at
Luena, just north of the copper belt.
Kalej Nkand says the plant will help meet its own energy
needs and those of a broader industry currently suffering
constant power cuts due to a 200 megawatt shortfall. But he is
vague on where the cash would come from; Gecamines, he said,
could finance a feasibility study but would then bring in
as-yet-unnamed international partners.
Mining analysts and executives, though, say debt-laden
Gecamines will struggle to raise money in a tough environment
where investors are only too aware of Congo's poor reputation.
Despite potentially lucrative concessions, mismanagement has
left Gecamines with little to show for it but acres of rusting,
To make matters worse, the average age of Gecamines' swollen
workforce of 12,000 - three times what it says it needs - is 56.
In a 2006 U.S. embassy cable from Kinshasa published by
Wikileaks and dating back to previous management under Canadian
lawyer Paul Fortin, even U.S. diplomats suggested Gecamines
should throw in the towel.
"Rather than trying to remake Gecamines, the region and the
country may be better served if Fortin eliminates the company's
mining operations and focuses only on its role as a holding
company," the cable said. "Political and economic conditions do
not suggest that Gecamines should do otherwise."
Fortin, who was managing director as part of a World Bank
programme, resigned in 2009.
Gecamines holds minority stakes in virtually all key
projects in the copperbelt region of Katanga, but its efforts to
get a bigger piece of the pie and to review stagnant contracts
has revived memories of the country's painful 2008-2010
"revisitation" of mining contracts that irked investors.
One industry source described as "messy" the scuffle last
year over the Deziwa copper project, held in partnership with
British Virgin Islands-registered Copperbelt Minerals but which
Gecamines sought to control.
Gecamines finally settled with Copperbelt last month and
bought them out after the state miner scrambled to block a
potential sale to a Chinese company, sparking months of intense
negotiations. Gecamines now plans a $1.5 billion, 200,000 tonne
a year plant to process output from the two copper projects,
Financing is again unclear, even for a plant projected at
the low end of the current cost curve.
"The deposits are there, but whether (Gecamines) can raise
$1.5 billion remains to be seen," said Bolade Olu-Adeyanju,
metals analyst at Wood Mackenzie.
"Financing is the biggest impediment to Gecamines. Foreign
investors are wary of the high political risk in Congo."
Industry sources had spoken of a potential sale of a stake
in Deziwa to trader and veteran Congo investor Glencore
, which owns the nearby Mutanda operation. But that now
looks unlikely, given Gecamines' demand to keep a majority stake
and its stated desire to use Deziwa as a test for its new
"We can envisage several possibilities, but where we go into
partnership, it is clear that we want to be majority owners,"
says Kalej Nkand, speaking behind copper doors in his corner
office on the fifth floor of Gecamines' headquarters in the
region's mining hub of Lubumbashi.
A NATION'S COPPER BACKBONE
At its peak, Gecamines was almost a state within a state. It
directly employed more than 30,000 people and ran schools,
hospitals, flour mills and vast swathes of arable land, much of
which it still maintains, further draining its stretched
Its roots are in the mining company set up at the turn of
the last century by statesman Cecil Rhodes and Belgian King
Leopold II, which later became Union Miniere du Haut Katanga,
and then Gecamines.
In the boom, Gecamines accounted for about 7 percent of
global copper production and more than 60 percent of cobalt.
But tumbling copper prices in the 1980s took its toll, as
did the compounded effect of the Mobutu government's system of
patronage, which pillaged the company over decades.
The group hit a low point with the collapse of the central
portion of the Kamoto underground mine in 1990 after years of
underinvestment. At the time, Kamoto's cobalt was Gecamines'
most profitable export.
Added to that, ethnic unrest in the 1990s drove out many of
the workers from neighbouring Kasai that staffed Gecamines'
mines and offices. Like the country crumbling around it,
Gecamines hit a nadir from which it is still recovering.
And yet a short distance from the Kambove plant, there are
undeniable signs of Gecamines' investment drive. South African
contractors are overseeing the construction of a new processing
plant that will boost the operational hub's capacity to digest
towering stockpiles of rich ore from the nearby Kamfundwa mine.
At Congo's border with Zambia, to the south, some 100
excavators and other machines were clearing customs.
But Kambove - like other parts of an empire that was once at
technology's cutting edge - is testament to the challenge ahead
for Gecamines' bosses.
"The concentrator has a capacity of 4,000 tonnes (of ore)
... but we struggle to make 3,000 tonnes. We have a lot of power
cuts and limits on production, so sometimes it is closer to
2,000 tonnes," says Louis Okuka, Kambove's veteran director,
wearing a blue hardhat and a weary expression.
"Back in 1961, the plant was all automated."
Down the road towards the town of Likasi, the Shituru copper
refinery is another rusting behemoth dating back to 1929,
operating at roughly 10 or 20 percent of its nameplate capacity.
Its nerve centre - far removed from the flat-screen
computers of modern automated operations rooms - boasts two
chalk boards and technology reminiscent of a 1950s science
fiction show. Workers in the nearby offices sit in front of
plastic-covered computers amid mountains of lever-arch files.
"Since 1929, generations have passed through here - not just
of men, but of equipment. Iron in this climate, when it has
worked 40 or 50 years, has outlived its useful life," says Joel
Tshinyama Pau, director of the Shituru operation, who says
progressive investment can revive the plant.
Yet many still question whether Congo's politicians and
business leaders are really prepared to develop the assets.
Albert Yuma, the head of the Gecamines board, is close to
Congolese president Joseph Kabila and has faced questions over
secret asset sales to another Kabila associate, Israeli
businessman Dan Gertler.
Despite falling foul of the IMF for the company's failure to
meet transparency requirements, Yuma has launched stinging
attacks on Congo's poor business climate in his role as head of
the country's business federation and has publicly championed
the Gecamines re-launch.
A return to former glory will be a gruelling slog and won't
be popular with everyone. Recent skirmishes with artisanal
miners working illegally on Gecamines concessions have left new
diggers with smashed windows and flat tyres.
But a rebirth would also be a boost to national pride and,
particularly, the pride of the copper producing region of
Katanga that it once sustained.
"We can't accept to see Gecamines disappear," said B.H.
Ntambwe Ngoy, head of Gecamines' central operations.
"We have Gecamines in the blood."