Congo, Dem. Rep. Mining Report Q2 2016 - New Market Research Report

From: Fast Market Research, Inc.
Published: Thu Mar 17 2016

The DRC's mining sector will be supported by the country's vast high-grade mineral reserves and strong mining project pipeline. Despite this , low mineral prices, mineral polic y uncertainty and unrest in the east will limit investment growth.

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The country's regulatory uncertainty remains a key concern to the sector's long-term growth. Ongoing mineral policy uncertainty could deter new investment from entering the sector and halt new projects from coming online. In our view, a production growth slowdown would have considerable effects within the country.

On January 13, 2016, Gecamines and the China Nonferrous Metal Mining Company (CNMC) signed a non-binding memorandum of understanding to build factories at the firm's two existing mines, that could boost the current annual output of 15,000 tonnes (kt) of refined copper to 100kt at full production capacity.

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Glencore's September 7, 2015 decision to suspend operations at the firms Katanga mine will significantly impact DRC's copper production growth. We have revised down our average annual copper output growth from 10.2% to 5.0% and from 7.2% to -10.0% in 2015 and 2016, respectively. In our view, DRC's copper production will decline from 1.1 million tonnes (mnt) in 2014 to 1.5mnt in 2016.

Beyond 2016, we remain positive on DRC's mining growth potential due to the country's' vast high-grade mineral reserves and strong project pipeline. The DRC's high-grade copper deposits, amongst the largest in the world, will continue to attract investment, strengthening the sector's growth outlook. Tiger Resources' Kipoi copper mine is estimated to contain grades above 3.0%, significantly higher than the world average of 0.6%. High grade copper will become an increasingly important issue as some of the world's largest mines, such as Antamina in Peru, Escondida in Chile and Grasberg in Indonesia, are experiencing falling ore grades and higher extraction costs. We forecast DRC's copper output growth to ramp up beyond 2016, averaging 6.7% during 2017-2019.

We have revised down our gold production forecast for the DRC from 15% to 5.0% and from 21.0% to 10.0% for 2015 and 2016, respectively. Although gold output growth will be boosted by major miner presence, low production costs and a solid project pipeline, low gold prices will dent the sector's growth. We forecast DRC's gold output to grow from 1.0 million ounces (moz) in 2016 to 2.62 moz by 2020. This would represent average growth of 22.8% y-o-y during 2016-2020.

The Congo, Dem. Rep. Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

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