1.1. The Copper-Cobalt Belt of the DR Congo in Turmoil

Since 2015, the global economic slowdown has mainly depressed commodities markets. Commodities prices weakened in 2015 compared to 2014. From the first quarter of 2015 to the first quarter of 2016, they further declined, further: for instance, copper by 11.8%, cobalt by 16.3%, and zinc by 50.3% . As pera consequence, consumer countries, including China and other emerging countries, have reduced their consumption of commodities, affecting rent-based economies, particularly the DR Congo. Referring to the cCentral bBank of Congo (BCC), from 2013 to 2014, a trade surplus decreased from USD 899,014,864.03 to USD 366,395,382.77. In 2014, the official exports from the country amounted to USD 12,322,805,140.34, of which minerals and oil stood at USD 9,951,402,354, or 95.5% of the total country’s export value. Mineral exports, mainly base metals (copper, cobalt, and zinc), produced by the Générale des Carrières et des Mines (GECAMINES SA) and its partners, accounted for 80.76%. Crude oil produced by Perenco represented 6.3% of the country’s export value.

Pertaining to the mining sector, the country concentrates about 10% and 34% of the world’s copper and cobalt reserves in the former Katanga province in Ssouth-eastern DR Congo . In 2014, the DR Congo was the world’s sixth -largest copper producer and the world’s leading cobalt producer. In 2015, Katanga was split into four provinces (Haut-Lomami, Haut-Katanga, Tanganyika, and Lualaba). The newly created provinces, namely Haut-Katanga and Lualaba, are included in the so-called "copper-cobalt belt," the cornerstone of the country’s industrial mining activities. Since 2015, the copper-cobalt belt has experienced a severe crisis owing to a drop in base metals’ prices. This is the second crisis compared to the crisis resulting from the global financial crisis inof 2008-2009. As a result, mining companies (GECAMINES SA and its partners) have reviewed their strategies. Most of them have temporarily interrupted their operations. For instance, Glencore Plc, a Swiss commodities trading company, had suspended the activities of Kamoto Copper Company (KCC) in September 2015 for 18 months. Other mining companies have delayed their investments projects. According to the Mining Chamber of the Fédération des Entreprises du Congo (FEC), a reduction of mining output has been noticed in the copper-cobalt belt. For example, copper production decreased from 265,636 tonnes to 234,313 tonnes from the first quarter of 2015 to the first quarter of 2016 (see graph 1). The mining crisis already led to about 13,000 jobs lossest among mining companies and their sub-contractors during the first quarter of 2016.

Graph 1. Copper Price and Production in the Copper-Cobalt Belt from 2007 to First Quarter 2016

Source: FEC, Chambre des Mines, (2016), Industrie minière en RDC – Premier trimestre 2016, mai 2016, pp. 1-17.

The mining sector’s crisis in Haut-Katanga and Lualaba has negatively impacted the provincial and national economies, including public finance. It has contributed to deepening the social crisis in the copper-cobalt belt. Also, it has participated in further deteriorating the country’s business climate. As a pParadoxically, it has also created favorable conditions for Chinese companies to invest in the copper-cobalt belt. For instance, on 9 May 2016, China Molybdenum Co. purchased a 56% stake of Freeport-McMoRan Inc., an American mining company, in Tenke Fugurume Mining (TFM) Holdings Ltd for USD 2,650,000,000. TFM is one of the world’s largest copper and cobalt mines in Lualaba. The Congolese authorities were not informed of such a mining deal and contested its validity as GECAMINES holdets ains 20% of stake in TFM. As pera consequence, the TFM selal,e has become a complex economic and legal issue in a tense pre-electoral context.