HomeBase MetalsGood news for DRC and Zambian mining companies

Good news for DRC and Zambian mining companies

Lumwana – one of Zambia’s
biggest copper mines
New York, USA — MININGREVIEW.COM — 17 April 2009 – Mining companies operating in the Democratic Republic of Congo and Zambia are benefiting from the two governments cutting taxes and scaling back demands to revise contracts, as world demand for metals weakens.

“Negotiating leverage has swung back to the miners,” said political risk consulting firm Eurasia Group analyst Philippe de Pontetat. “Lower metals prices means that creeping resource nationalism gives way to more accommodating mining policies,” he wrote in a report released here.

Bloomberg News reports that mining companies have slashed production and delayed investment plans since last year, as recessions in the United States, Japan and Germany curbed demand. The Democratic Republic of Congo said last month that it would not significantly alter contracts with Freeport McMoRan Copper & Gold Incorporated, Lundin Mining Corporation and First Quantum Minerals Limited.

“Copper and cobalt producers may be the main beneficiaries of the shift in policy, while miners of diamonds, gold and uranium will also gain,” De Pontet wrote. Zambia is the largest copper producer, while together with the DRC it is the source of about half the world’s cobalt. Copper fell 54 % last year on the London Metal Exchange – the most since at least 1987.

“A recovery in some metals prices this year may help revive funding for the industry,” said De Pontet. “Mergers and acquisitions may increase, as promising but underdeveloped projects starved of finance are picked up by established companies,” he concluded.