DRC poses many challenges, but is worth investing in

DRC poses many challenges, but is worth investing in



- 18th of June 2020 -
 
During the June 17 session, titled 'How can existing and emerging players become/remain successful in the DRC?', private equity group Amed Funds founding partner Rudolph de Bruin said anyone seeking to raise funds to start a project in the DRC would need to realise that although the country had a lot to offer in terms of abundant mineral resources, it was like no other jurisdiction in terms of its social environment, the law and infrastructure.

He advised prospective project developers to ensure they have the best possible idea of the road ahead and have solid plans in place before they approach investors and fund managers for capital because lenders are well versed on how a successful DRC project should be planned.

He pointed out that the three factors of environment, social and governance (ESG) played an important role and that project developers should pay special attention to these. “There is also a broader concept around ESG that involves factors such as child labour, corruption and other negative factors,” said De Bruin.
Pangea Exploration Director Boris Kamstra, meanwhile, said anyone looking to invest in a project in the DRC needed to realise that there were rules for operating in the DRC and that it was important to ensure it partnered with an expert that can guide them in this regard.
De Bruin added that mining industry leaders needed to build compliance into their DNA, instead of simply approaching compliance as a “tick-box” exercise. “If there is not sincerity in what you are doing then you will be caught out.”

Further, incubation mining fund Simba Mgodi Mining CEO Olebogeng Sentsho said investors in the DRC's potential needed to embrace the Africa Mining Vision (AMV), which involves many factors of ESG and social community investment.
“A lot of aspects of compliance are trying to work themselves into the AMV and integrating it so the people in the country where the mines are, are able to get the entire benefit of the mineral resources.”
She also reiterated that many, if not all, compliance issues were much more than “tick-box" exercises.
“A great deal of value is lost in the minerals sector because companies repatriate funds too soon for those funds to make any kind of impact in the environment in the host communities within which the mines find themselves.”

Sentsho cautioned that “the time is up” for those going into Africa, and the DRC in particular, looking for maximum profits and minimal contribution. “As we look forward into a brighter African future I think that all of us need to subscribe, at our core and through our ethos, to the AMV as a whole. If you subscribe to the AMV I do not even think you will notice the compliance issues.”

She further explained that a lot of the DRC’s mining code is made up specifically of tax codes and legislation that ensures that value stays in the DRC. “That is important because the DRC needs to develop, so that going forward, it can actually have a proper and functional mineral economy that can evolve into a secondary economy that integrates industrialisation.”
Further, Sentsho said that as the African continent evolves, it is important for big miners to understand that the money can no longer leave the continent and should rather be invested back into the continent.

HOTSPOT

Although it can seem daunting to envision a project in the DRC, the panellists concur that the DRC has a lot to offer for those willing to uplift the host communities, the DRC at large and comply with local laws.
Post-Covid-19 investment into mining will pick up and many will look to the DRC to find new mineral deposits. But quizzed on why some may look more keenly to the DRC than other jurisdictions, De Bruin pointed out that mineral deposits in the DRC were bigger than most other places. “With good rewards come higher risks.”

He added that the general perception was that the DRC still had outstanding mineral deposits in Africa. “As the geologists say, if you want to find a big elephant then go and look in elephant country – and the DRC is definitely elephant country.”
Other places, like Botswana are definitely easier to build a mine in, said De Bruin, noting however, that major mines are unlikely to be found there, especially for upcoming resources such as battery metals (copper and cobalt), and gold. 
To pique investor interest, De Bruin said that, from a private equity lending perspective, compliance was a major requirement for any potential mining project, but especially one in the DRC.

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