Zuma makes DRC visit, two weeks later a once-bitten IDC invests there again

Does South Africa’s President – or the once proud Industrial Development Corporation for that matter – regard all of the country’s citizens as fools? Not even two weeks after Jacob Zuma and his entourage attended a “Binational Commission” in Kinshasa, State-owned IDC confirms it is to go back into the shark infested water that is the DRC mining sector. Only last year, JSE-listed Exxaro was forced to take a R5bn write off on the Mayoko iron ore project when the neighbouring Congo Brazzaville government was unable to deliver on “definitive port and rail agreements”. In the DRC itself, after the Government screwed it over on an investment in a copper mine, South Africa’s IDC is once again injecting taxpayer’s cash into a mining project there. Head of mining and metals Abel Malinga says the IDC has “done our Due Diligence”. Is that how they now describe a phone call from Pretoria? – Alec Hogg    

By Franz Wild and Tom Wilson

(Bloomberg) — South Africa’s Industrial Development Corp. said it plans to buy a stake in Alphamin Resources Corp., its first investment in the Democratic Republic of Congo’s mining industry since a dispute over a canceled project in 2010.

Alphamin temporarily suspended its stock from trading on the Toronto Stock Exchange on Monday, before saying in a statement that it was in “advanced negotiations” for the Johannesburg-based IDC to invest in its Congolese unit. No shares were traded after the resumption, leaving the company valued at about C$71 million ($54 million).

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“No definitive agreements have been entered into in respect of the financing and there can be no assurance that the financing will be completed,” the company said.

Alphamin is developing the Bisie tin mine in Congo’s eastern North Kivu province, where armed groups have controlled the area’s biggest mine on and off for years.

Read also: Reporter Mungadze and his strange tale of how Business Day protected the IDC

“We did our due diligence,” Abel Malinga, head of mining and metals at the IDC, said in a Thursday interview in Johannesburg. “We never run away from challenges.”

The South African development finance institution’s last mining asset in Congo, Africa’s biggest producer of tin and copper, was a stake in First Quantum Minerals Ltd.’s Kolwezi copper project in the southern Katanga province. After the government canceled First Quantum’s rights to the project, the company settled a case against Eurasian Natural Resources Corp., which had bought the disputed asset.

“We did get our money back,” Malinga said of the settlement.

The IDC’s planned return to Congo coincides with that of the International Finance Corp., the World Bank’s private investment arm, which was also a partner in First Quantum’s project. Tiger Resources Ltd. on Friday announced that the IFC would provide $40.5 million for its Kipoi copper project in Katanga.

Read also: IDC says won’t sell listed assets to help Eskom

“We are always in discussion with potential funders and those who can advance the project,” Alphamin Chief Executive Officer Boris Kamstra said by phone. “To that extent, discussions are always ongoing with our shareholders, with the IDC and with others.”

Congo’s east has been restive for about two decades, with regular clashes between the army and various rebels groups in the forested hills of the regions. Two soldiers were killed in an attack on the airport of Goma, the capital of North Kivu, in June.

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