The Democratic Republic of Congo is expected to maintain a clear and decisive lead in its copper production over Zambia into 2020 should Lumwana close as planned, new mining research reveals.
According to the 2015 Deloitte State of Mining in Africa report, new data shows that copper production in the Democratic Republic of Congo (DRC) will continue to outstrip Zambian production for the next five years, despite the DRC being ranked the least attractive investment country on the continent in terms of ‘ease of doing business’.
That country has, however, had its mineral royalties for non-ferrous metals stagnant at just two per cent since 2010, yet managed to produce over 900,000 metric tonnes of copper in 2013, registering a sharp rise and surpassing Zambia’s 754,916 tonnes produced that year.
In Zambia, the 2015 mining fiscal regime that saw mineral royalty tax jump to 20 per cent from six per cent for open pit mines, invited a sharp reaction from Barrick Gold Corporation who intimated a planned shutdown at its Lumwana asset in Solwezi.
“Considering the currently known forward investment and project pipeline, the DRC is expected to maintain its production lead over Zambia into 2020. Should Lumwana close as planned, the DRC will maintain a clear and decisive lead in copper production over Zambia,” the report stated.
According to the copper production profile for both countries, production estimates are projected to be around 1.5 million metric tonnes for Zambia, versus 1.7 million metric tonnes for the DRC by 2020, with no mines in that country executing any shut down plans.
On the ‘Ease of Doing Business’ index as measured by the World Bank, the DRC rates far worse than Zambia scoring at 181, but mining investments in that country have, however, doubled in copper exploration.
“With an ease-of-doing-business value of 184 in 2014, the DRC is perceived to be a country in which it is more difficult to do business than is the case in Zambia, coming in at 111. The 2014 exploration spend in the DRC is almost triple that of Zambia across all commodities, and the spend in copper exploration is double, with Zambia taking just over an estimated US $100 million and the DRC at just over US $200 million,” it stated.
And a detailed comparison of the two countries’ investment to 2018 reveals that the DRC has committed US $2.5 billion in project investment compared with Zambia’s US $300 million.
“The DRC and Zambia could be in a race to develop their natural resources. It appears the DRC is winning that race in terms of exploration investment, future mine development project pipeline and total copper production. It seems that by changing tax royalty rates, Zambia stands to remain behind in our suggested competition for investment,” stated the report.