HomeDiamonds & GemstonesDRC may re-start production if price is right

DRC may re-start production if price is right

DRC diamonds –
production is
on the wane
Kinshasa, DRC — MININGREVIEW.COM — 15 May 2009 – La Societe Miniere de Bakwanga (MIBA) – the state-owned diamond miner of the Democratic Republic of Congo (DRC) – will re-start production only on the condition that the gem’s prices have tripled.

“Prices need to rise to US$15 (R135) per carat from the current US$5 (R45) for the Mbuji Mayi-based company to revive output, which was halted for the first time in the company’s history in November last year,” said CEO Christine in an interview here with Bloomberg News.  

“We need the prices we get for our diamonds to rise above the production costs to start again,” Tusse added. “We hope this will happen soon.”

Like the DRC’s other state-owned mining operations, MIBA has suffered from years of under-investment and mismanagement. Production dropped to 405 000 carats last year from 973 000 carats in 2007 and 7.3 million in 2004, according to central bank data. Miba is 20%-owned by London-based Mwana Africa Plc, and operates in the Eastern Kasai province in central DRC.

The Industrial Development Corporation of South Africa and the Development Bank of Southern Africa agreed last September to lend MIBA US$140 million (R1.25 billion) to repair a hydropower plant and production equipment, as well as to pay salary arrears.

Bloomberg News quotes Tusse as saying that, after withholding the payment over concerns that MIBA could not turn a profit, the South African partners would decide soon whether to withdraw entirely, or to dispense the loan. “They were not sure it was a safe investment,” Tusse explained.