Comprehensive overview of the political scene and of the market for cobalt. Nothing specific on the state of the JV, but lots of good, current background info.
Pete
Congo Political Brief- February, 1998
The Democratic Republic of the Congo ("DRC") is one of the most mineral rich countries on the planet, containing over 50% of the world's supply of cobalt, as well as world class deposits of gold, copper, uranium, cadium, bauxite, magnesium and diamonds. To the west, the country touches the Gulf of Guinea, a major source of crude oil.
The stakes are huge. The 2.35 million square kilometer country has only about 2000 kilometers of usable roads, and debts are estimated by the World Bank at $14 billion. These issues were addressed at an aid meeting in Brussels on December 4, 1997. Delegations from at least 18 nations and 10 organizations attended the one day meeting organized by the World Bank, and agreed in principle to create a trust fund, but did not discuss the size.
The European Commission said at the conference that it would contribute US$50 million of health aid, and would provide for the infrastructure programme a total of approximately US$110 million. Just recently, Spoornet, the South African state owned rail company, and the DRC reached an agreement to extend their contract for six months to June this year. The DRC's mining industry, which relies on rail freighted fuel, commodities and acid products, was pleased with Spoornet's decision.
In a recent radio and television speech to the people of the DRC, President Laurent Kabila urged national cohesion for reconstruction and commemorated the liberation of the people. The President outlined his top objectives for national reconstruction for 1998, including construct and repair the road system, encourage investment, reduce unemployment, conduct a census of the population and most importantly, prepare for free elections in 1999.
The National Bank of Congo (BNC) reported on January 24, 1998 that it is satisfied that the currency has stabilized. The bank noted that it is attempting to integrate the multiple currency zones into a single currency zone as a prerequisite to introducing the new Congolese franc.
There has been controversy over the state mining company Gecamines' decision to cancel Texas-based American Mineral Fields tender for the Kolwezi tailings project. The deal was never ratified by the government, and Gecamines canceled the tender, saying the company took advantage of a wartime situation and signed disputable documents with superintendents in Goma.
Many foreign firms have entered into agreements with various Congolese companies. Qualcomm Incorporated of California, USA, has recently announced that it had signed a $70 million high quality, high capacity, digital telecommunications contract with African Telecommunications Incorporated (AfriTel). Tenke Mining Corp. is developing the Tenke Fungurume copper-cobalt deposits in Katanga, and has just signed a major long term power agreement with La Societe Nationale D'Electrique (SNEL). This contract is the first major commitment for power for a new mining project in the DRC. Agip-Petroli, of Italy and PetroCongo, have just opened their fourth gas station in Kinshasa. Finland's Outokumpu Oy, the country's leading metals and mining group, announced on January 16, 1998 the signing of a $553 million contract to supply process equipment and engineering for a new slag treatment plant to be built in Lubumbashi, DRC. Russell Resource Group of Australia has just signed an exploration protocol with L'Office des mines d'or de Kilo-Moto (OKIMO) of the DRC, with Russell agreeing to bring in $5 million worth of equipment and technology to the Congo for its work. Svedala SA, a South African mining equipment subsidiary of Svedala Industries of Sweden, has secured an order to supply a mobile concentration plant for the extraction of copper and cobalt from the Luiswishi mine in the DRC. On January 31, 1998 a Chinese delegation led by the president of Norinco, arrived in Kinshasa to negotiate on unspecified agreements. President Kabila has promised a $42 million infrastructure reconstruction project in South Kivu, DRC, with the help of Rwandan, South African and German companies.
Foreign mining companies have commenced negotiating out the details of a vast copper-cobalt project around the mining centre of Kolwezi in southern Katanga. The Kolwezi Group West consortium deal, led by Anglo American Ltd. of South Africa, will combine the expertise of Gecamines, Canadian, South African, Chinese and European firms. Group West will cover a 22,000 square kilometer area, and the project's capital cost is estimated at about $1.2 billion. President Kabila stated that the Congo hopes that other investors will be inspired by the project and understand the DRC is entirely willing to enter into partnership with all serious investors of the world. ABN-AMRO Global Mining Research, in a February 1998 analysis suggest that the most advanced development in the DRC is International Panorama Resource's (V.ILP) Kakanda tailings and open pit project. International Panorama has just recently submitted a completed feasibility study to Gecamines, and project financing is underway.
On the political side, the DRC Constitutional Commission is working at preparing a new constitution. Three sub-commissions have been installed, one dealing with the text regarding rights and fundamental liberties, national defense, security and political parties; a second dealing with the organization of the legislative, executive and judicial branches of government; the third dealing with financial matters. It is expected to deliver its completed product to President Kabila by the end of February. On January 21, 1998 the Government of Belgium announced that it will reopen its consulate in Lubumbashi., which has been closed since 1990. US Secretary of State Albright, during her recent visit to Kinshasa said she would be working with the US Congress to "prepare a package of $35-40 million to assist the Congolese people and their government in building democratic institutions and governing capacity." The Minister of Justice, Mwenze Kongolo, met with judicial officials in Kinshasa to discuss the needs of the judicial system, with policy being announced within two weeks and the Kabila government implemented a "Triangular" political philosophy that is meant to chart a new course for the Congo's foreign relations. The new stance seeks new levels of cooperation between the DRC and the Islamic-Arab world, Asia and Africa. This strategy is the work of International Cooperation Minister Luanghy.
A recent African-World Bank summit held in Kampala, Uganda called for regional integration and economic cooperation. A joint International Monetary Fund (IMF) and World Bank delegation has told Congolese officials that the two institutions were ready to help with national reconstruction once the DRC's arrears were paid. The United Nations Development Program (UNDP) is sending a team of Congolese experts to the DRC who are going to work with the government on the task of national reconstruction. Other UN agencies such as the population fund are now in contact with the Kabila government to help develop the country.
At a recent mining conference in CapeTown, South Africa the chairman of the DRC's state mining company Gecamines, Ambroise Mbaka Kawaya Swana, stated that recent controversies have not hurt investment in the DRC. The DRC's mining minister, Frederic Maliba Kibassa, confirmed at the same conference that deals with Canada's Barrick Gold Corp. and an Australian firm had just received government approval. Another mission of note, is the US based Corporate Council on Africa's outreach mission to the DRC scheduled for March 16-20, 1998. This trade mission is designed to be instrumental in providing information about business opportunities presently available in the DRC. The mission plans for the delegation to meet with the head of state, cabinet ministers, and leaders of the private sector.
Of course improvements in the economy and transportation will take time and the DRC is unquestionably a country prized by Western companies as potentially one of the wealthiest mining regions in the world. Mr. Kabila's revolution swept away the old political realities for a new hope and determination to work towards concrete change in this emerging nation.
BRIEF ON COBALT-USAGE AND OUTLOOK
Cobalt is produced primarily as a by-product of other more abundant metals. It is a hard and brittle metal, with a metallic permeability of about two thirds that of iron. Cobalt is a strategic and critical metal used in many diverse industrial and military applications. Cobalt's properties, including such qualities as heat resistance, high strength, and wear resistance make it an extremely useful metal in a variety of different applications.
Unlimited market possibilities exist for cobalt, from super-alloys, used in the manufacturing of aircraft engine parts, helicopter rotors, prosthetic implants, and high strength cutting tools, to magnets, video tapes, computers, portable phones, vitamins, cancer treatment tracers, steel belted tires, and most significantly batteries, both rechargeable and electric, for use in mass produced cars.
Cobalt has been designated a strategic metal by the U.S. government because of its uses in the defense and aerospace industries. Additionally the U.S., the world's largest consumer of cobalt, does not have a domestic producer of the metal. Other sources of supply, Zambia, the Democratic Republic of the Congo (DRC), the Commonwealth if Independent States (formally the Soviet Union), remain uncertain.
Peter Searle, Managing Consultant, with Resource Strategies of London, UK suggests that world cobalt consumption in 1997 is in the order of 29,400 tonnes, growing to 37,000-40,000 tonnes per annum by the year 2002. This represents a growth rate of between 3.9% and 5.4% per annum and Searle argues that compared with other metal market growth rates, that this is quite high. He suggests that the fastest growing sector will be in portable rechargeable batteries. Peter acknowledges that there are a large number of projects that could yield 70,000 tonnes per year of additional cobalt by 2005, however the prospects for a rapid increase in supply have slipped over the past year.
Resource Strategies suggests that because of the importance of intermediate raw materials in the short term, and a gradual tightening of refining capacity, cobalt cathode prices will remain at or near the current level of $25 per pound until 2000. The company sees a progressive reduction in the price to US $15 per pound, in 2002 and US $11 in 2004, as more production comes on stream. The Metal Bulletin suggests that there could be a tightness in supply in the next few years, if the market has to rely on current refining capacity levels.
International Panorama Resource Corp. (V.ILP) is in the advanced stages of a major cobalt project in the Democratic Republic of the Congo. Bateman Minerals & Industrial of Johannesburg, South Africa has completed a feasibility study which has confirmed the viability of the project, and the project is successful down to cobalt prices of US $8.00 per pound. Major infrastructures such as rail, road, water and hydropower, as well as a trained and educated workforce are readily available. Considering the extreme importance of cobalt, and its unreliable sources, ILP is a company poised for a promising future.
International Panorama Resource Corp.
Ste. 300 - 555 West Georgia St., Vancouver, B.C. V6B 1Z5
1-800-931-1818 e-mail:intlpan@istar.ca intlpanorama.com |
