Congo minister warns of economic and social crisis due to mine closures amid COVID-19
2020-04-21 08:43:41 [Print]
Democratic Republic of Congo's mining minister warned mine shutdowns due to the COVID-19 pandemic would trigger a "catastrophic" economic and social crisis in the country, as he reported a 15% slump in cobalt exports in the first quarter.
Congo, the world's biggest producer of cobalt, is highly reliant on mining, with the industry contributing 32% of its GDP and 95% of export revenue in 2018, according to the central bank.
"The DRC would not be able to withstand an abrupt halt in the mining production of the flagship projects operating there if they invoked force majeure," Mines Minister Willy Kitobo Samsoni wrote in a ministry analysis.
Exports of cobalt, a metal used in batteries, fell by 15.2% in the first quarter compared to the same period last year, he said in the memo, while copper exports increased by 12.8%.
"As a result of mine shutdowns, we risk moving from a health crisis to an economic crisis, which would in turn lead to a social crisis," Samsoni wrote.
The clause of force majeure allows certain terms of an otherwise legally binding agreement to be ignored because of unavoidable circumstances.
Companies mining in Congo's southern copper belt include Glencore subsidiary Katanga Mining, China Molybdenum's Tenke Fungurume, MMG, and Chemaf, while Ivanhoe is developing two copper mines there. Disruption caused by the pandemic has so far driven Chemaf to shut its Usoke copper-cobalt processing plant, while Ivanhoe has suspended operations at its Kipushi copper mine project.
Restrictions on movement in countries through which Congo's metals are transported could also trigger declarations of force majeure, Samsoni said.
Zambia, a key transit country for copper and cobalt, has mandated all returning residents and foreigners to be quarantined for 14 days in a government facility at their own cost, according to a foreign ministry document.
Congo, the world's biggest producer of cobalt, is highly reliant on mining, with the industry contributing 32% of its GDP and 95% of export revenue in 2018, according to the central bank.
"The DRC would not be able to withstand an abrupt halt in the mining production of the flagship projects operating there if they invoked force majeure," Mines Minister Willy Kitobo Samsoni wrote in a ministry analysis.
Exports of cobalt, a metal used in batteries, fell by 15.2% in the first quarter compared to the same period last year, he said in the memo, while copper exports increased by 12.8%.
"As a result of mine shutdowns, we risk moving from a health crisis to an economic crisis, which would in turn lead to a social crisis," Samsoni wrote.
The clause of force majeure allows certain terms of an otherwise legally binding agreement to be ignored because of unavoidable circumstances.
Companies mining in Congo's southern copper belt include Glencore subsidiary Katanga Mining, China Molybdenum's Tenke Fungurume, MMG, and Chemaf, while Ivanhoe is developing two copper mines there. Disruption caused by the pandemic has so far driven Chemaf to shut its Usoke copper-cobalt processing plant, while Ivanhoe has suspended operations at its Kipushi copper mine project.
Restrictions on movement in countries through which Congo's metals are transported could also trigger declarations of force majeure, Samsoni said.
Zambia, a key transit country for copper and cobalt, has mandated all returning residents and foreigners to be quarantined for 14 days in a government facility at their own cost, according to a foreign ministry document.
Copper Conc. TC 25%min CIF China
Unit:USD/mt
China copper concentrate producers' operating rate statistics by province by month
Unit: %
