Engineering & Mining Journal

JUN 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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Page 28 of 115

REGIONAL NEWS - AFRICA JUNE 2018 • E&MJ 27 FINISHING notice that the recently introduced miner- al code was here to stay. A new set of mining laws were signed in March this year, in spite of misgivings by companies such as Glencore, Ivanhoe and Randgold among others. Mining companies have warned that the new law put in jeop- ardy more than $3 billion of income from existing copper, cobalt and gold projects. At the time of its promulgation in March the country's president Joseph Kabila said concerns would be addressed, and revisions considered. However, it now appears increasingly unlikely miners will secure any relief. "Change is always diffi- cult, but in the end we can all adapt," Si- mon Tuma Waku, former mining minister and the architect of the new code told the KBM. "The DRC's mining industry will grow 18% in 2018, which is very much more than any other market." Changes in the new code include a greater stake for the state, increased from 5% to 10%, as well as a 10% share to be held by Congolese citizens. Mineral royalties were raised from 2% to 3.5%, while items declared 'strategic substanc- es' would invite an additional 10% royal- ty. Among the latter are cobalt and coltan, two metals very much in demand by the high-tech industries. Waku said the previous code had been drawn up in the shadow of conflict, at a time when investors were wary. "Mining policy hadn't changed since it was first in- troduced in 2002. At the time civil war had just ended and the code was drawn up to make the country as attractive as possible." Since then the DRC's value to inves- tors had been established, Waku said, and the mining code needed to be adapted. The DRC is the world's 6th largest pro- ducer of copper, the biggest cobalt supplier while also exporting large quantities of gold and diamonds. At the same time explora- tion had widened the scope of the DRC's mineral resources, including for example cobalt and coltan, which the original code did not take into account, Waku added. Louis Watum, managing director of DRC operations for Ivanhoe Mines, which has one mine and another nearing com- pletion underway in the country, warned that the DRC risked losing investment to competitors. "Africa now only draws 40% of exploration spend, with most now going to South America. The DRC needs to be competitive to attract exploration, which is the most expensive part of mining." He said that current projects also re- quired substantial investment, and fur- ther taxes and royalties would add to the financial burden of operating in the DRC. For instance, Ivanhoe's Kipushi zinc mine flooded in 2011, and had to be de-wa- tered. "It took us three years to pump the water out of Kipushi, and at great cost." However, given the enormous financial troubles the DRC faces, the government was unlikely to budge on the new code, said economics Professor Claude Suma- ta of the National Pedagogical University in Kinshasa on the sidelines of the KDM. "More than 70% of the population lives off a dollar a day, the international poverty benchmark. The government is under pres- sure to grow the economy away from miner- als alone, and to do this they need money." The government also wanted more lo- cal involvement he said. "The aim is for more local ownership, especially of small businesses. This is the way to build up a middle class." Sibanye-Stillwater Gets Reserve Bank Approval for Lonmin Acquisition Sibanye-Stillwater has received the approv- al of the South African Reserve Bank, as required in accordance with the Exchange Control Regulations of South Africa of the proposed acquisition of Lonmin Plc, which was announced on December 14, 2017. The transaction is expected to close during the second half of 2018 and is subject to the passing of the required resolutions by Lonmin and Sibanye-Stillwater sharehold- ers and the approvals of the competition authorities of the United Kingdom and South Africa. The all-share takeover valued Lonmin at about $382 million. "We are pleased to have received this important regulatory approval in a timely manner, which takes us another step closer to concluding this important transaction," said Neal Froneman, CEO of Sibanye-Stillwater. "Management re- mains focused on ensuring that the re- maining conditions are met and will notify stakeholders as further progress is made." Sibanye-Stillwater is an independent, global precious metal mining group, pro- ducing a unique mix of metals that in- cludes gold and the platinum group met- als (PGMs). Lonmin is a primary producer of PGMs. (Continued on p. 38)

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