Gregory Mthembu-Salter
In a world where metal prices are only just starting to emerge from a three-year slump, and Internet companies are the darlings of the stock market, prospects for substantial fresh investment in Southern Africa are bad, but getting better. This was the message emanating this week from Indaba 2000, Africa’s premier mining investment conference, held annually in Cape Town.
The conference draws together politicians, people from every aspect of the mining business, and bankers and investors, and provides a unique guide to the region’s prospects with international investors.
Delegate after delegate returned to the theme of political risk, generally with reference to mineral-rich, but strife-torn, Angola and the Democratic Republic of Congo. The recent intensification of the conflict in Angola was treated with weary resignation by the mining companies. Those with prospecting licences in the Angolan diamond fields are holding on to them, but show no serious commitment to proceeding further.
The picture for oil companies though, who were not present at the conference, is very different. For them, these are boom times in Angola, with oil production rising and massive new sites still being discovered safely offshore in the Atlantic, away from the mayhem on land.
Congo, however, is a disaster. Mining houses all over the world have greedily eyed Congo’s enormous mineral resources for years, and many convinced themselves after Laurent Desir Kabila took over as president in 1997 that the time had come to make their move. America Mineral Fields, a junior mining house from London, was so keen that it even tied up a deal with Kabila before he took power, for the Kolwezi tailings project near Lubumbashi – one of the richest copper and cobalt deposits in the world. However, the company soon fell foul of Kabila’s now notorious penchant for changing his mind. Once in power, Kabila awarded Anglo American the same contract. America Mineral Fields took Anglo to court but later settled, and the two are now joint partners at Kolwezi. The problem is that two years on they are both still waiting for a presidential decree just to give them title to the mine.
And then there is the war. Zimbabwean soldiers have prevented Congolese rebel forces from getting too close to the copper mines around Lubumbashi and the diamond mines around Mbuji-Mayi to the north, but this has been of little comfort to mining houses, which think in 10- or 20- year cycles, and even less to their more cautious bankers. Some of the more adventurous juniors have tried to persuade their bankers that the front line in the war is elsewhere and that it is safe enough to go in, but the bankers refuse to move without political risk insurance in place, and right now that is almost impossible to come by.
Fortunately for Congo’s neighbours, international investors are not as ignorant about Africa as they used to be and understand that because there are problems in one country it does not means others in the region are off limits, too. New gold mines opening up in Tanzania are generating considerable interest, and Zambia has even benefited from Congo’s woes. Zambia’s privatisation of its mining assets, which began in 1993, was fatally delayed in the mid-1990s. Companies such as Anglo lost patience and turned their attentions to the richer deposits just north of the border in Congo’s Katanga province. But the civil war put a stop to that and Anglo returned to Zambia. Today, the company is on the verge of concluding the purchase of two major Zambian mines, and Canada’s First Quantum Minerals is about to buy two more.