DRC mining sector still attractive investment destination, despite risks – by Ilan Solomons (MiningWeekly.com – August 5, 2016)


The Democratic Republic of Congo’s (DRC’s) mining sector will receive increasing amounts of foreign investment in the coming years, particularly from China, as a result of its low production costs and high-quality minerals, says research firm BMI, a unit of Fitch Group.

Nevertheless, the research company notes, political and operational risks will remain key concerns for investors, as with other countries in the African subcontinent.

BMI states that the DRC will remain a “destination of choice” for Chinese mining investors in the coming years, owing to the country’s rich endowment of copper and gold. The firm further notes that Chinese investment in copper mining will be supported by the DRC’s low production costs and the largest undeveloped high-grade (2% to 3%, compared with the global average of 0.8%) copper deposits in the world.

Additionally, the research firm points out that China’s slowing gold production growth, as a result of depleting domestic reserves and rising production costs, will also bring Chinese investment into the DRC’s largely untapped gold mining sector.

The DRC’s growing economy – with an average annual real gross domestic product (GDP) growth rate of 7.9% between 2011 and 2015, and the mining industry accounting for 10.9% of GDP in 2015 – will increasingly absorb most foreign investment in the African region as South Africa’s production costs rise.

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