Interview with Serge BILAMBO from Standard Bank

INTERVIEWS

Mining and Business Mining and Business Magazine met with Serge Bilambo at Indaba Mining, Head of Mining Projects at Standard Bank.

Mining and Business Magazine: Mr Bilambo, tell us about the new projects that will take place in 2018-2019?

Serge Bilambo: the next two years 2018-2019 should see some exciting projects evolve significantly:

Some in the production phase, such as SICOMINES, which is expected to reach its maximum production capacity, or Kamoto Copper Company, which started up its new production plant a few weeks ago and plans to start up significant production in 2018 with the aim of reaching its maximum output by the end of 2019;

Others in the construction or preparation phase of the mine, such as KAMOA/KAKULA from the Zijin group, KIPUSHI CORPORATION from the IVANHOE group in partnership with GECAMINES, METALKOL from the ERG group and the DEZIWA field with SOMIDEZ;

All these projects reflect the dynamism of the mining sector in the Democratic Republic of Congo, helped by the evolution of the prices of certain minerals such as cobalt and zinc. The Democratic Republic of Congo is therefore very likely to reach a production of 1.25 -1.30 million tonnes of copper by the end of 2018 and consolidate its position on the African continent.

MBM: What are the concrete consequences of the mining code changes that will force companies to repatriate 60% of currencies instead of 40%?

SB: First of all, I would like to point out the fact that all parties, namely the Government of the Democratic Republic of the Congo, mining operators, donors and civil society shared the opinion. That is, the mining code in force and promulgated in 2002 while promoting the revival of the DRC’s mining sector, had weaknesses and that it was advisable to improve it.

The 2002 Mining Code required operators with mining rights to repatriate a minimum of 40% of their export earnings. This provision, which included in the Central Bank of Congo’s Foreign Exchange Regulation, was reinforced by the latter in October 2014 by restricting the use of this portion of the revenues repatriated within the domestic economy. Thus, this 40% of the income from repatriated exports could only be used to make local payments.

Mining operators were experiencing difficulties in absorbing these repatriated revenues because several of their suppliers were abroad.

The law on local subcontracting aimed at promoting local sub-contracting and the emergence of a middle class in the Democratic Republic of Congo was, therefore, moving in the same direction by offering the mining sector the possibility of absorbing these revenues locally for the benefit of local sub-contractors. Consequently, I feel it is essential to provide a framework for local subcontracting to professionalise it, make it efficient and competitive and thus give the law a chance to achieve the objectives set.

However, remember mining operators have difficulty in finding specialised, professional local sub-contractors offering quality services and meeting international standards.

I have not yet taken note of all the provisions of the said Mining Code and nor is it confirmed, however, if this provision to increase the minimum export earnings repatriated from 40% to 60% as a novelty brought to the new Mining Code, it will exacerbate the feeling and frustration of the sector. Specifically about the height of the minimum to be repatriated and the restrictions on the use of the said funds (domestic economy only). It is true that the DRC’s economy is highly dependent on the mining sector, which is the primary source of foreign exchange, but the possibility of using these flows within the national economy remains a concern for operators in the mining sector.

However, it should be pointed out that in West African countries, mining operators have the obligation to repatriate 100% of export earnings, whereas closer to us in Zambia, mining operators have no obligation to repatriate export earnings. All this to say that this provision is not a Congolese exception but requires careful consideration.

MBM: Information to communicate?

SB: I would just like to conclude by recalling that Standard Bank DRC is very attached to the mining sector in the Democratic Republic of Congo, which is an integral part of its strategy in the DRC. The Bank has made significant investments to equip its subsidiary in the DRC with state-of-the-art technological tools and to enable it to continue to support these clients in the mining sector and their value chain and to share its long experience and expertise in the industry with them.

We, therefore, hope that the current uncertainties related to the revision of the Mining Code will not be disturbing.

Leave a Reply

Your email address will not be published. Required fields are marked *