Congo copper output to rise 25 percent

Time of article published Nov 17, 2010

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Exports from Congo's southern copperlands will rise 25 percent to over 1 million tonnes next year due to renewed investor confidence following a government mining contract review, the top official in the province told Reuters.

Moise Katumbi, governor of Katanga Province, said companies and their backers were boosting spending following the conclusion of the review last month, which resulted in Freeport-McMoRan Copper & Gold's conceding a small share of its huge Tenke Fungurume copper project to the state.

The deal ended years of uncertainty in Congo's mining sector, and analysts widely viewed the outcome as positive for the company, which retained the bulk of its controlling interest in the project.

“After Tenke got its revisitation, even the people who had a bit of fear are putting in money. Everyone is financing now, even the banks,” Katumbi said.

Katanga, Congo's sole copper-producing region and source of about 5 percent of the world's supply of the metal, is on track to produce 800,000 tonnes this year, he said.

“There are plenty, plenty projects,” Katumbi added. “End of next year we are going to reach 1 million tonnes. In five years' time we are going to reach 1.5 million,” he said.

Exports in 2011 will include 700,000 tonnes of metal and 300,000 tonnes of concentrate, he said.

The forecast far exceeds a projection from the mines ministry earlier this year showing copper exports would reach just over 516,000 tonnes in 2011 - a figure Katumbi said is now out of date due to new estimates from firms.

Valery Mukasa, chief of staff in the mines ministry, could not confirm Katumbi's figures but said data were being reviewed as forecasts were constantly being raised by companies.

Katumbi said Katanga Mining and Mutanda Mining, both part-owned by Swiss metals trader Glencore, along with China's CDM, South African Metorex's Musoshi project and Anvil Mining , part-owned by metals trader Trafigura, would together pump $2.2 billion to expand their projects throughout the province.

Perceived contract insecurity prompted political risk premiums in Congo to rise 40 percent after the state withdrew the rights to Canadian miner First Quantum's $750 million KMT project in Kolwezi last year and handed them to Kazakh rival ENRC in August.

EXPORT METALS TARGET

Katumbi said he wanted investors to focus on developing agriculture, health services and tourism in the sunny and mineral-rich province, the wealthiest in the country. He said Katanga would this year contribute 60 percent of receipts to the national treasury, up from 45 percent.

Katumbi said that although provinces are meant to receive 40 percent of receipts back from the central state, Katanga receives less than 10 percent, a shortfall he makes up in part by levying provincial road tolls and minerals fees that elicit protests from investors.

Earlier this year, Katumbi introduced a controversial $60-a-tonne tax on mineral concentrates in an effort to encourage companies to add more value in the country.

“The time I came here, people were just exporting unprocessed material and concentrate, and nobody wanted to build a factory. Concentrates were almost 95 percent (of exports); today it is 30 percent,” he said.

“Sixty dollars on the concentrates is nothing. In Zambia they are paying 15 percent on the export of concentrates,” he said. “My aim was to stop the concentrates this year. Before I leave this office, people must export metals.”

Copper prices have dropped to as low as $7,920 a tonne this week after hitting a record high of $8,966 last week.

Katumbi, who is also chairman of TP Mazembe football club which beat Tunisia to take the African Champions League trophy at the weekend, says he will step down as governor next year after only one term to pursue his own business interests.

“Politics is taking me a lot of time and creating enemies for nothing,” he said.

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