AMBASSADOR INTERVIEW: “The DRC and Africa in general offer solid investment opportunities for discerning investors that are willing to take the risk”

AMBASSADOR INTERVIEW: “The DRC and Africa in general offer solid investment opportunities for discerning investors that are willing to take the risk”

Lara SmithExclusive interview with Lara Smith, MD, Core Consultants and an event ambassador for the upcoming DRC Mining Week in Lubumbashi.

Thank you for this opportunity, please tell us more about your organisation and the work that you do in the mining industry.
My company is called Core Consultants: Our company specialises in market analysis and market positioning for the commodities industry. We have two main bespoke services, Consultancy and Communications.

Our Consultancy Services provides market intelligence that is used in forecast analysis, benchmark analysis and economic analysis. Applications for this service are numerous including pre feasibility and feasibility studies, governments wishing to impose a tax, studies involving transfer pricing, expert witnesses, companies wishing to enter new markets and lenders deciding whether to fund a particular project. 

Our Communications service is a PR service, assisting mining and engineering firms communicate effectively with potential investors and clients for the purposes of raising capital, raising their profiles and expanding their business. Services include reworking their marketing material, roadshow presentations, investor-deck, positioning our clients online across social media platforms and premium, high traffic news sites and making strategic introductions. 

What in your view do you regard as the highlights for DRC’s mining sector and community during this past year?
Alphamin coming into production as the world's largest tin supplier. The company has benefitted the surrounding community in Kivu, provided jobs and revenue and increased stability in the region. We need more companies to follow Alphamin's lead. They show that it really is possible to "get things done" effectively in the DRC.

What in your view are the main challenges in the industry for 2020.
Negatives/ Concerns: The collapse of the price of cobalt in the market by almost 60% of its value for various reasons, but companies are actively seeking alternatives to cobalt in order to diversify reliance away from the DRC which is fraught with artisinal miners, child labour, governance issues. This was further spurred by the 10% super tax on battery metals. It has become imperative for the Congolese government to put in place stability measures if it is to be an active participant in the battery mineral space which is set to dominate this century. 

Increase in mining royalties due to the revision of the Mining Code in 2018 has deterred investors

An excessively high debt burden of $9.5bn, which in the current low economic climate is even more concerning. 

And what opportunities in the DRC mining sector are you most excited about currently?
There has been some positive aspects that have accompanied the transfer of power.Firstly the election that saw Felix Tshiskesedi win the presidency last year was a peaceful transfer of power, which is positive for investors. Further, Tshisekedi's promise to engage investors, stating that he would be "attentive to the concerns of mining companies and called for a "win-win" application of the mining codes is something that gives hope that investment will return to the region. 

While prices have come off markedly, we do believe that cobalt will continue to be in high demand as electric vehicle penetration rates increase. Most of the cobalt for these cars will continue to come from the DRC. 

What is your vision for the sector?
To have a stable mining sector, with fair mining codes and practices. For the DRC mining sector to be an example to other regions globally. 

Looking ahead to 2020, what is on your calendar that you can share with us?
Unfortunately, a few things were taken off the calendar due to Corona!

But, we are currently taking on more communication clients- mostly in Europe, Australia and the US. Many of them are seeking to raise capital and need our guidance on developing effective roadshow materials, marketing materials and an online presence. 

We are also sponsors at the ICDA chrome event this year and are undertaking work in this area to understand whether South Africa should apply an export tax on unbeneficiated material. We also have a few mandates to sell specific mines. 

What surprises or delights you most about this sector?
How truly global mining is. Mining/ Raw materials are the building blocks that touches just about every aspect of our lives whether we are conscious of it or not. 'If it's not grown, it's mined' and that comes with enormous responsibility to "do things right."

What is your message to current and future investors in DRC’s mining sector?

Mining in the DRC offers very good returns. We believe that in general the risks are overstated relative to the potential returns. Transparency has definitely improved and many local businessmen are making money. It is however important to understand the operating costs and regional politics. Inclusion/ upliftment of the local community is vital for the success of any project. It is vital that investors address the human capital issues and requirements and balance this need with trying to include the local community and create jobs as far as possible. 

DRC Mining Week celebrated 15 years of gathering the mining community in the country last year.  Why would you consider it valuable to attend DRC Mining Week?
The DRC is home to one of the most extensive mineral resource bases in the world. From oil, to cobalt to gold, this region offers pretty much everything. Given our global ambitions of sustainable energy, advanced robotics, electric vehicles, portability, the DRC's mineral base is simply too big and diverse to be ignored. 

The fact that this event attracts more than 5000 delegates, to what many would consider "deepest, darkest Africa," is testament to its importance. I would argue that anyone with an interest in the sector would benefit from attending the event and gaining a deeper understanding of the DRC. 

What will be your message at the event this year?
The DRC and Africa in general offers solid investment opportunities for discerning investors that are willing to take the risk. It remains one of the only places in the world with such a diverse resource base and we expect it to remain an important region for the global commodity market.