(Minews) - The Democratic Republic of Congo, Africa’s biggest copper producer, told miners to halt any project expansion requiring more power amid a shortage that will take years to resolve, according to government documents.
The country will institute an electricity-rationing program for miners and its state-owned power company must stop signing new contracts, Congolese Prime Minister Augustin Matata Ponyo said in a January letter to the ministers of mines and energy.
“I equally deem it necessary that mining clients postpone immediately and until further notice all expansion projects requiring supplemental energy,” Matata said in the letter, which was given to Bloomberg News by a member of the Federation des Entreprises du Congo, the Congolese business group, and verified by the government.
Glencore Xstrata Plc (GLEN)’s Mutanda and Katanga Mining projects and Freeport-McMoRan Copper & Gold Inc. (FCX)’s Tenke Fungurume mine are Congo’s top copper producers. Katanga Mining is scheduled to expand production to almost 300,000 tons by the end of the year, according to statements and filings on Glencore and Katanga Mining’s websites. Tenke plans to add a second sulfuric acid plant by 2016, Tenke Fungurume Mining Ltd. said in a January press release.
Both Mutanda and Katanga Mining will have more than enough energy to meet their needs for 2014 under the current power supply according to a Nov 2013 power project report on Glencore’s website. Eleven percent of Mutanda’s 2013 energy came from generators, the report says. Glencore spokesman Charles Watenphul declined to comment further yesterday.
Record ProductionMining contributes approximately 80 percent of Congo’s annual export revenue and accounts for about 30 percent of gross domestic product, the letter says. Copper production topped 900,000 metric tons in 2013, a record for the central African nation, according to the International Monetary Fund. CRU Group ranked Congo the biggest producer in Africa and the world’s sixth-largest last year.
Congo can provide only about half of the 900 megawatts demanded by miners in the province of Katanga, where the country’s copper is primarily located, Matata said. The nation can import about 100 megawatts from the state-owned Zambia Electricity Supply Corp. and another 50 megawatts from Lusaka, Zambia-based Copperbelt Energy Corp. to help make up the difference, according to the letter.
“Without this input, no significant increase in existing production nor development of new operations” is feasible, Matata said. New energy projects will not come on line “for several years,” he said.
Power RationsAfter mediating discussions between FEC’s Chamber of Mines and the state-owned Societe Nationale de l’Electricite, the government decided to ration its 461.7 megawatts of available power among all of Katanga’s miners, according to the letter.
Electricity allocations were made based on existing contracts, production importance, and the minimum energy required for profitable business, the letter says.
Under the rationing program, Tenke and Katanga Mining will attain their minimum power requirements when imports from Zambia are taken into account, the letter says. Glencore’s Mutanda will receive 96 percent of its minimum needs, while MMG Ltd. (1208)’s Kinsevere project will receive 80 percent of its required energy. Rations will also see deficits for projects run by Eurasian Natural Resources Corp. and Jinchuan Group International Resources Co. (2362)
MMG is able to meet the total power needs for Kinsevere through diesel generators and there is currently no change to forecasts on production or costs, according to Kathleen Kawecki, a Melbourne-based spokeswoman for MMG.
Self-SufficientThe rationing of power doesn’t affect production at Jinchuan’s Ruashi mine as the company has had self-generating power capacity since last year, Chief Financial Officer Tak Chuen Wong said. The company will explore other sources of power, he said.
Freeport’s spokesman couldn’t immediately comment.
Congo’s parliament has passed a law liberalizing the electricity industry that will allow for private investment in new projects and which is awaiting President Joseph Kabila’s signature.
“I want more companies to come to Katanga to invest in energy in the province,” Governor Moise Katumbi said by phone yesterday. “There are several sites where we can build hydro plants” to power future investment in the copper industry.
The Chamber of Mines is “continuing to search for solutions to work around this critical situation,” Simon Tuma-Waku, the body’s vice president, said by e-mail yesterday.
