DRC: Looking to Capitalize on Katanga’s Wealth

DRC: Looking to Capitalize on Katanga’s Wealth


April 13, 2010 | 1901 GMT

ERIC FEFERBERG/AFP/Getty Images

Workers at a gold mine in Iga Barriere, Democratic Republic of the Congo

Summary

The Democratic Republic of the Congo’s (DRC’s) minister of mines on April 11 announced a ban on the export of concentrated mineral products from the country’s southeastern Katanga province. The next day, the DRC’s finance minister said the country must crack down harder on the smuggling of Katangan minerals into Zambia. The announcement of the ban and the finance minister’s comments indicate the DRC’s central government is working to overcome difficulties posed by geography to capitalize on the mineral wealth found in Katanga.

Analysis

The minister of mines for the Democratic Republic of the Congo (DRC), Martin Kabwelulu, on April 11 announced a ban on the export of raw minerals from the country’s southeastern Katanga province, one day before Congolese Finance Minister Matata Mponyo said the DRC must do a better job of cracking down on the smuggling of Katangan minerals into Zambia.

Katanga is a resource-rich province located far from the Congolese capital, Kinshasa. The DRC’s vast and largely unconnected geography leaves peripheral regions such as Katanga economically oriented toward neighboring countries; for Katanga, this means Zambia and, more distantly, South Africa. In attempting to maintain control over Katanga’s mineral wealth, Kinshasa must perform a delicate balancing act.

Katanga forms the Congolese portion of what is known as the Copper Belt, which traverses the DRC-Zambian border (the Zambian province abutting Katanga is actually called Copperbelt). Copper is not the only mineral mined in great volume in southern Katanga; a related ore, cobalt, also is found there, along with other valuable minerals. Although the province is part of the DRC, there is no dependable road or rail infrastructure on an industrial scale linking Katanga with Kinshasa, leaving the province’s economy much more oriented toward the south. This is where Zambia comes into play. Virtually all of Katanga’s mineral exports leave the country through border crossings at the Congolese transit town of Kasumbalesa. Mponyo specifically characterized Kasumbalesa as an epicenter of corruption in the minerals trade.

(click here to enlarge image)

From Zambia, Katangan minerals are mostly trucked overland through Zimbabwe or Botswana into South Africa, where they are offloaded onto ships at the port of Durban. Some shipments are exported through the Tanzanian port of Dar es Salaam and the Mozambican port of Beira, though these are marginal export centers in comparison to Durban, despite their geographic proximity to the Copper Belt. South Africa’s wealth has enabled it to finance better roads and better port facilities, so it has more opportunities to capitalize on the mineral wealth stretching through southern Africa and into the DRC.

(click map to enlarge)

Ideally for Kinshasa, the DRC would be integrated with a rail, road and port network that would allow copper and cobalt mined and refined in Congolese territory to be shipped overland and out to market through its Atlantic port. However, the large rainforest in the heart of the country makes this impossible in the near future (the DRC is the country that inspired Joseph Conrad’s novel “Heart of Darkness,” and the geography has not changed much since then). The next best option for the government, then, is to cash in on the Katangan mining industry while not retaining absolute control over it.

This means reducing the amount of minerals smuggled across the border, but it also means attempting to build up the value-added side of the industry within the DRC’s borders. Katangan copper and cobalt usually are not mined in their purest forms but rather as ores that must then be refined before being used. At present, virtually none of the ores mined in the DRC are refined in Congolese territory. To Kinshasa, this is inefficient and does not maximize profits, which is why Kabwelulu issued the April 11 decree aiming to ban the export of unrefined copper and cobalt.

However, large mining firms prefer to export ores from the DRC for refining, mainly in Zambia. Zambia’s ruling Movement for Multi-Party Democracy has prioritized the creation of a pro-business environment there, and the relatively transparent economic regime provides a stark contrast to the DRC’s reputation for corruption. Furthermore, foreign firms in the DRC must deal not only with Kinshasa but also with the provincial administration of Katangan Gov. Moise Katumbi Chapwe based in Lubumbashi — each of which has its own interests, interferences and expectations. In Zambia, foreign firms only have to deal with one government.

It is noteworthy that Kinshasa, rather than the Katangan provincial government, is making the push to rein in smuggling activities at Kasumbalesa and develop the value-added side of Katanga’s mining industry. The provincial governor does have close ties with the regime of Congolese President Joseph Kabila (whose family hails from Katanga), but Kabila has other political allies besides Katumbi who must be taken care of through patronage, especially with presidential elections around the corner in 2011. Kabila is under pressure in Kinshasa to demonstrate that he can bring the government’s influence to bear in areas where it matters, whether in distant economic regions such as Katanga or in the disputed offshore territory abutting the Angolan province of Cabinda, where Kinshasa is fighting for a greater stake in crude oil concessions it believes Luanda is occupying illegally.

Katanga has a history of separatist leanings dating back to the rule of former Zairian President Mobutu Sese Seko, when the province was known as Shaba. The Kabila family’s links to the region help to ensure that Katanga remains part of the DRC, but this is hardly sufficient to keep regional power players complacent. And while a few statements from government ministers is hardly a guarantee that Kinshasa will increase control over the provincial economy, the trick for any ruler in Kinshasa is to force Katanga to pay its share of royalties to the central government while allowing the provincial authorities some opportunities to siphon off revenues that Kinshasa could try to claim for itself.

DRC: Looking to Capitalize on Katanga’s Wealth

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