Death of DRC mining go-to guy will reshape country’s resource sector

On Sunday a close business adviser to the president of the Democratic Republic of Congo Joseph Kabila was killed and the country’s finance minister seriously injured after their Gulfstream IV jet crashed after overshooting an airport runway in the east of the central African state.

The DRC, home to the world’s largest cobalt resource and second globally in terms of copper deposits, has just emerged from a fiercely contested and disputed presidential election that saw Kabila re-elected, but leaving his camp without a sufficient majority in parliament.

Bloomberg reports Augustin Katumba Mwanke, the former governor of copper-rich Katanga province, was seen by many analysts and diplomats as the power behind the throne:

“The death of Augustin Katumba Mwanke will have serious repercussions for the Kabila regime and in particular for the mining sector,” Wilson, senior consultant at africapractice, said by e-mail today.

“His removal from the political scene will encourage a power struggle among politicians keen to fill the void.”

Reuters reports Katumba was also a central figure during negotiations for the $6 billion minerals-for-infrastructure deal with China:

“Every major player in the mining sector has negotiated with him or through him, and his death will reshape power dynamics in the sector,” Africa Practice’s Wilson said.

“It creates uncertainty for projects reliant on his continued political support, and more broadly across the sector.”

The FT reports Mwanke is closely associated with the culture of corruption in the country that seems to be in a perpetual state of war:

Mr Mwanke was named in a 2002 report by a UN panel of experts on Congo as an illegal minerals profiteer and recommended for sanctions that included a travel ban and assets freeze. While he was subsequently removed him from all official functions, he maintained his grip on Congo’s vast resource investments and his political influence.

Many companies doing business in the DRC have burned their fingers.

At the start of the year following a dispute with the DRC government over expropriation of one of its key assets, First Quantum Minerals sold out completely from the country.

The Vancouver-based copper miner sold its Kolwezi tailings project along with the Frontier and Lonshi mines and related exploration interests for $1.25 billion, about half the value some analysts put on the projects before the DRC government stepped in.

The deal is in the final stages of completion and it is uncertain if it would be affected by the death of Katumba. Canadian Business describes how First Quantum was fleeced after being investigated for “suspected widescale misconduct” by the DRC government:

Its courts, which are not independent, slapped a stinging US$12-billion judgment on the company.

The government transferred the properties for nominal sums to close associates of DRC president Joseph Kabila, who promptly flipped them for significant profits; Eurasian Natural Resources Corp. (ENRC), a large London-based company dominated by Kazakh owners, paid just US$175 million for the Kolwezi project, which cost First Quantum nearly $800 million to purchase and construct.

In the US financial reforms signed into law in July last year was a provision on conflict minerals, particularly from the DRC. The LA Times opines:

In an effort to choke off funding for the armed thugs and rebel militias that have killed more than 5 million people and turned Congo into the rape capital of the world, the new law will require thousands of U.S. companies to disclose whether their products contain minerals from rebel-controlled mines.

Tin, tungsten, tantalum and gold are essential to the manufacture of cellphones, laptop computers, digital cameras and other products.

It is only in recent years, thanks to public-awareness campaigns by groups such as the Enough Project, that American consumers have begun to understand that the gadgets adding convenience to their lives are often the byproducts of forced labor, sexual violence and mass murder. in January wrote that as attractive deposits become harder and harder to find in traditional markets miners are pushing the limits of the political risk they are willing to take on. Read more on how gold diggers are exploring the final frontiers.

Image of simulated plane crash by Tomasz Szymanski /