On May 1st of this year, according to press reports, soldiers of the army of the Democratic Republic of the Congo (DRC) descended on the east of the country to arrest numerous gold traders. They confiscated semi-refined gold and US$2M in cash. The event underscored the Kinshasa government’s seriousness in bringing order and control to the country’s artisanal mining industries, although cynics were quick to point out that, with an election scheduled for the end of the year, DRC President Felix Tshisekedi’s administration might have had other reasons to act.
The change in regulation for the artisanal mining sector in the country actually started in 2022, with an agreement announced between the DRC government and Primera, a UAE company, to establish a monopoly joint venture designed to take control of all artisanal mining in the country. The terms of the agreement include an initial concessionary period of 25 years and greatly-reduced export taxes for materials exported via two DRC-UAE joint ventures, Primera Gold and Primera Metals.
Primera’s initial focus has been on gold. Official DRC exports of artisanal gold have been minuscule, while neighbouring Rwanda and Uganda have reported export revenues in the hundreds of millions of dollars, despite the widely-held view that there is little true domestic gold production in either country. Primera’s stated goal is to export 60 tonnes per year of gold from the DRC (worth about US$3.6Bn at time of writing), a remarkable contrast to the roughly US$2M of artisanal gold exported in 2021 and on a par with same-period gold exports from Rwanda plus Uganda. This year, so far, Primera’s operation has reported around 1 ton of gold exports, a big change yet far short of the target. It is conceivable that the raids and arrests of May 1st could have been designed in part to capture the attention of sceptical gold miners and traders in the region.
However, Primera’s agreement extends to other commodities besides gold, notably tin, tungsten and tantalum. All three metal ores are extensively mined in the DRC in the provinces abutting Uganda and Rwanda. It is widely believed that a material fraction of Rwanda’s exports of these materials is in fact supplied by mineral concentrates smuggled out of the DRC.
The Kinshasa Government had until recently not taken steps to enforcing its monopoly on artisanal production beyond gold. We understand that has now changed, and the example of the gold traders’ abrupt detention is likely to lead to a smoother transfer of collections from the current system of traders and comptoirs to the Primera monopoly.
Should the monopoly succeed in taking substantial control of artisanal DRC production of tin, tungsten and tantalum (3Ts), the consequences for the region could be destabilising, provided the assumptions about resource smuggling and sale ex-Rwanda are accurate. If Kinshasa is able to stem the flow of contraband ores into Rwanda, this could materially reduce Rwanda’s foreign exchange earnings. Conflict between the DRC army and the Rwanda-sympathetic M23 armed group has only just subsided, with M23 close to many key mineral-producing concessions. It is unlikely in our view that Rwanda would be willing simply to walk away from a lucrative source of foreign exchange and profit.
In the past month, a US$1.9Bn investment plan has been announced between the DRC, via its state-owned company Société aurifère du Kivu et du Maniema (SAKIMA), and UAE, via Dubai-based Primera. The investment plan is to develop infrastructure and industrial-scale mining in the eastern DRC, focused on North and South Kivu. This is a laudable goal, but in our view likely to be many years from operational fulfilment. The only industrial mine in the region is Alphamin’s Bisie undergound tin mine in North Kivu, which took six years to bring into production (as an aside, Bisie is outside the current scope of the Primera monopoly and we do not expect it to fall into the Primera scheme). Developing multiple industrial-scale mines is likely to take at least as long, and will be highly contingent on political stability in the region.
There is now a political question over the future of the largest columbite-tantalite (coltan) producer in the region, the so-called Rubaya mines in Masisi, North Kivu. Once owned by SAKIMA, the concessions have been permitted since early 2000s to Mwangachuchu Hizi International (MHI), later renamed Société Minière de Bisunzu Sarl (SMB). SMB has a monopoly on buying the ore from the artisanal co-operative COOPERAMMA that carries out mining on the site. SMB’s owner, local senator Edouard Mwangachuchu, was arrested in March this year after a rebellion by M23 that had marched on the regional capital Goma. During it, the mine, abandoned by the police and with SMB staff evacuated, was trespassed into, and mine equipment reportedly damaged, before the area was retaken by DRC forces. In May, flash flooding caused a lethal landslide at the minesite. Mwangachuchu is now being tried by the military tribunal in Kinshasa over allegations of collaborating with M23, which he denies. Mwangachuchu’s defence team is claiming that “anti-Tutsi and anti-Rwandan sentiments” are being used against the ethnic Tutsi senator and owner of the Rubaya concessions, where the miners are predominantly ethnic Hutu. There is a track of grievances too between miners and the mine police.
This is the fraught background against which the DRC-UAE joint venture agreement now seeks to reshape the eastern DRC mining sector. The partnership with UAE, which gains significant control over 3t and gold resources, is taking form just as Tshisekedi’s government is trying to renegotiate the partnership with China signed in 2018 by his predecessor Joseph Kabila. This agreement gave China a sizeable monopoly over DRC’s resources of copper and cobalt in return for infrastructure investment. The Tshisekedi administration has criticised the deal as tilted unfairly in China’s favour. It has also come under pressure from the US which is vying with China for the region’s critical minerals supply. Last year, the Biden administration signed an MoU with DRC and Zambia on battery raw materials for the US electric vehicles supply chain.
The DRC-China agreement itself was reached amid reform of previous monopolies in the DRC copper belt formed via joint ventures with state mining company Gécamines. These too have gone through a series of evolutions, from investments in DRC concessions by the Israeli businessman Dan Gertler under the Kabila administrations, to joint ventures with Swiss trading house Glencore and London-listed ENRC, a company formed via the privatisation of Kazakhstan’s mining sector. Multiple corruption investigations later, Gertler is under sanctions in the US. Glencore last year settled its disputes with its the DRC partners and is implementing a new Ethics and Compliance Programme in the country. The UK Serious Fraud Office in late August dropped its 10-year long investigation into ENRC over the mining firm’s Congolese investments, citing insufficient admissible evidence.
The history of the DRC mining sector, over decades of armed conflicts, features successions of overseas actors — private and state — monopolising and industrialising its resource extraction via regional join ventures, This has largely centred on what had been one vast, powerful, and relatively conflict-free, south-east copper belt province of Katanga, split up in 2015. However, a bigger cast in this history is an ethnically diverse Congolese artisanal mining sector operating across the country, engaging entire families and communities, and estimated to produce 15-30% of DRC’s cobalt and most of its 3T minerals and gold. Much of this is sold to middlemen, local and foreign alike, including Chinese, bypassing monopolies.
Multiple efforts to regulate this sector include conflict minerals (and later child labour) traceability initiatives — notably the tin industry’s ITSCI — drawn up in response to the US Dodd-Frank Act. Led by international industry groups and NGOs, these have met with resistance, including to certification costs shouldered by ore suppliers, and with allegations of ore laundering and smuggling continuing regardless. SMB left ITSCI in 2019 for the rival RCS blockchain scheme, amid a business dispute and disagreement over costs. Now SMB too is caught up in political DRC-Rwanda frictions. Amid all regulatory initiatives and changes of mine control through investment, politics or armed conflict, artisanal diggers have played a constant, major, but rarely politically voiced role. Whether the new UAE-backed venture will succeed in winning over and industrialising this sector in the Kivus remains to be seen.
For the short term, the picture in the Kivus and Rwanda is not promising and bears watching closely. President Tshisekedi is up for re-election at the end of this year, although there is speculation that the election may be postponed, as it was previously by former President Kabila. And to cloud the picture even further, the UAE support for the DRC follows support from Qatar for Rwanda, raising the possible spectre of outside influence.
None of this is likely to be helpful to longer-term development goals for the region. Rwanda now has a tantalum-niobium refinery in commissioning or early-stage operation. There is a tin smelter under development in the southern DRC; the Manono region is looking at a potential tantalum refinery; and there is perennial talk of a refinery in the Kivus, as well as the just-announced UAE plans to develop industrial mines. All these downstream investments are imperiled by the threat of violence, now with added uncertainty created by the Primera monopoly. The much-troubled region would benefit from political, regulatory and security stability. Unfortunately, today, that seems some way off.
By Andrew Matheson and Patrick Stratton
Additional reporting by Polina Sparks, MMTA
About the authors
CPM Group is an independent commodities research, consulting, and investment banking advisory company headquartered in New York. The company is considered the foremost authority on markets for precious metals, along with high purity manganese, molybdenum, tantalum, and other metals.
Andrew Matheson and Patrick Stratton are recognised experts in tantalum and niobium markets.
Andrew Matheson, the founder and principal of OnG Commodities LLC, has 25 years of experience in the tantalum industry, leading Cabot Corporation’s tantalum ore procurement and mineral development activities, as general manager of Cabot’s sputtering target business and serving as director of R&D. His experience includes a range of other specialty materials including niobium, scandium, and rare earth metals.
Patrick Stratton spent 16 years with Roskill, where he led the tantalum and niobium research. His experience also covers gallium, magnesium metal, and titanium. In addition to being the lead author of published research reports on these commodities, he has also undertaken many consulting assignments for producers, project developers, financial institutions and government bodies.
