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Is This the Beginning of Stability in the Congo?

Eight months after incumbent Joseph Kabila won the Democratic Republic of Congo’s (DRC) first free elections in 46 years, relative stability has reigned, breeding optimism that after years of corruption, mismanagement and war, the massive jungle-clad country can begin to fulfill its promise as a mining powerhouse and regional leader.

“Peace in the country could herald stability in the region of East Africa, and the start of large-scale foreign investment,” says Rabih Fayad, regional intelligence manager for International SOS in the Middle East and Africa, who is based out of Dubai.

The DRC, formerly Zaire and the Belgian Congo, is known to have rich reserves of diamonds, copper, uranium, gold, and coltan—which is used in cell phones and laptops. Up until a decade ago, the country ranked high on the list of the world’s producers of several of these metals.

Then the deadliest conflict since the Second World War sucked the DRC and at least six other countries into what became known as Africa’s World War. Nearly four million people died.

The international community, through the auspices of the United Nations, has spent more than $400 million trying to bring peace and stability to the country, which has been ruled by a transitional government since the end of the 1998-2003 war.

With little of the expected violence occurring before or after Kabila’s election, miners are hoping it is time to finally tap the rich veins of ore that have gone unexploited, which has been referred to as a “geological scandal.”

“It’s looking like there was a certain amount of acceptance of the vote. There is reason for optimism,” says John Rendeiro, vice president of global intelligence for SOS International.

U.S. miner Phelps Dodge Corp. has been making gradual progress with its Tenke Fungurume copper and cobalt project in Katanga province to the south, providing an encouraging sign to companies and investors. The Arizona-based copper giant says production in the area could start as early as 2008.

African copper-cobalt mining firm Camec is recruiting seasoned mining engineers in South Africa and Canada to fast-track its Luita operation, also in Katanga. The Luita copper and cobalt mine is set to reach full production in its first phase by March 2008. Gold and diamond miners in South Africa have also shown keen interest in the DRC, observers say.

“The number of international flights in and out of the DRC has dramatically increased. Investment has been flowing in rapidly in recent months since the elections,” says Paul Wood, managing director of international security operations for KSI Vance.v

Wood recommends Katanga as a headquarters for mining companies moving into the DRC because it is close to the main mining areas in the south, meaning there is no shortage of work for the local nationals and, therefore, less risk of possible uprisings. “People are more engaged and less interested in disruptive criminal and antigovernment activities,” says Wood.

Lumbumbashi, the provincial capital and the country’s second-largest city, is a location where mining companies have traditionally based their operations because of its relative safety.

Conversely, the gold-mining zone to the northeast around Goma should be avoided for a long-term footprint because it is a high-risk area, Wood says. Among the threats are kidnapping, extortion, armed militia groups and warlords, and other criminal activity.

Security should be in the forefront of any company’s plan to go into the DRC regardless of their location, Wood says. An initial phase of involvement should be consultancy and a security risk assessment, supplemented by updates on the current situation by a credible local security partner.

All companies need a security manager; that person, often an expatriate fluent in English and French, typically develops standard operating procedures, crisis response, and contingency and evacuation plans.

It is also good practice to use a reputable local guard company, such as Delta Force Protection and DSA. “It’s best to spread the business among local companies,” Wood says.

Stumbling blocks remain in the way of the development of the DRC. Kabila has garnered the majority of his support in the east of the chaotic country, but in the west the warlords are watching to see how the political process goes. If they see an opportunity to exploit any vulnerability, they are likely to take it. One plus is that the UN has extended its peackeeping mission until the end of 2007. It was to expire in May.

There is also the issue of the nation’s broken infrastructure. “This is a country completely devastated by the civil war, and the infrastructure needs to be rebuilt from zero,” says Fayad.

The Inga power projects on the Congo River are famous “white elephants” left over from former dictator Mobutu Sese Seko and currently inactive. The rehabilitation of the dams at Inga Falls, and the contruction of new hydroelectric facilities, could potentially generate enough electricity to light up much of Africa and solve the continent’s power crisis, but the price tag of the work is in the billions of dollars.