Natural Resource Exploitation
In 2014, copper production and exports crossed the 1 million tons threshold, making DRC the world’s 6th largest copper exporter. The production of gold also more than doubled.
The mining sector dominates the DRC's formal economy and is expanding (12% of GDP in 2010). Minerals account for the vast majority of the D.R.C.’s exports and represent the single largest source of foreign direct investment (FDI). Copper, cobalt, gold, coltan, tin, and zinc are the most important metals mined and produced in the D.R.C. State-owned mining company Gecamines is the largest actor in the copper and cobalt sectors. Gecamines’ independent production capacity collapsed due to corruption, civil unrest, world market trends, and failure to reinvest profits toward routine maintenance and innovation. Gecamines is now most often a state partner in public-private mining partnerships with foreign companies.
The diamond sector currently accounts for about 10% of the D.R.C.'s export revenue. This is from both gem and industrial-grade diamond sales that were around $875 million in 2008 and were projected to approach an estimated $1 billion in 2009. Production by the D.R.C. parastatal, MIBA, has significantly declined from past decades; MIBA ceased operations in 2009 and 2010 due to technical and financial difficulties. While its current production is minimal, MIBA is working to restructure its operations and administration and seeking financing to resume operations. Nearly all current diamond production in the D.R.C. is artisanal and takes place in the two Kasai provinces.
Freeport McMoRan's Tenke Fungurume Mining (TFM) site is the largest US investment in the DRC. Located some 110 miles northwest of Lubumbashi in Katanga province, TFM invested approximately USD 1.75 billion in the first phase of its development to bring its copper and cobalt production on-line, and still stands as a bright spot in Katanga's otherwise declining economy. The site includes the open mining pit, the semi-autogenous grinding mill, the facilities used for solution extraction and electro winning (a chemical and electrical process used to extract the copper), and the building used to cut and prepare the sheets of copper cathode for shipping. The first truckload of copper was exported on 22 April 2009.
TFM-funded social responsibility programs target the local community of approximately 61,000 inhabitants. TFM reported expenditures of USD 9 million for community development (schools, clinics, clean water wells, and markets), USD 2 million for malaria control programs, and USD 12 million to resettle 350 households in three villages that were too close to the mining operations. The new brick homes constructed for the resettlements were a significant improvement over the previous village's homes, and the program is popular with the local population.
In June 2000, the United Nations established a Panel of Experts on the Illegal Exploitation of Congolese Resources to examine links between the wars and natural resource exploitation. Reports issued by the panel indicated that countries involved in the war in Congo developed significant economic interests in the D.R.C. that complicated Congolese Government efforts to control its resources and the mining sector. Although the original Panel of Experts was disbanded when its mandate ended in late 2003, a separate UN Group of Experts continued to look into these issues due to the apparent links between the illegal armed groups in the eastern part of the D.R.C. and natural resource exploitation.
The Group of Experts published a report in December 2008 that documented how armed groups in eastern D.R.C. finance their activities through the exploitation of natural resources and provided evidence of the collaboration and support of Rwandan authorities and the Government of the D.R.C. in supporting such groups. In November 2011, the Group of Experts issued a new report, which stated that armed groups in eastern D.R.C. continue to engage in the illegal extraction of minerals to finance their activities. The report also documented that these armed rebel groups, in particular the FDLR, continue to engage in human rights abuses, including attacks against civilians.
Due to the drop in global demand for commodities in 2008-2009, the D.R.C. faced a serious fiscal and monetary crisis, with international reserves near zero and the exchange rate rapidly deteriorating. By 2009 the economy was struggling as the mining sector had contracted. Customs receipts were down by more than 50 percent since the beginning of the global economic crisis, while over 200,000 jobs had been directly lost, with the total number of job losses much higher. While most agreed that economic diversification, with an emphasis on the agricultural sector, was necessary, extremely limited infrastructure and a cultural and economic environment strongly linked to mining remain constraints. The one bright spot in the currently bleak economic environment is Freeport-McMoRan's $1.7 billion Tenke Fungurume (TFM) copper/cobalt mining concession, which started copper production in March 2009.
The international community responded quickly to the D.R.C.’s deteriorating economic situation by providing emergency financial assistance, including from the IMF (U.S. $200 million), the World Bank (U.S. $100 million), and the African Development Bank (U.S. $97 million). The European Union and Belgium also provided emergency assistance. This assistance helped stabilize the economy and ensure the continuation of basic services. With the support of international emergency assistance and improved prices for key export commodities, the D.R.C.’s macroeconomic situation stabilized and the economy recovered significantly. GDP growth for 2010 was 6.1% and 6.9% in 2011. The value of goods and services exports amounted to 57.5% of GDP in 2010.
In 2008, the D.R.C. became a candidate country for the Extractive Industries Transparency Initiative (EITI), a multi-stakeholder effort to increase transparency in transactions between governments and companies in the extractive industries. Though the Government of the D.R.C. took some positive steps under EITI, including establishment of a National EITI Committee, publication of the first report on EITI in the D.R.C., and the hiring of an independent auditor to carry out the validation of the EITI process, the D.R.C. did not meet its March 9, 2010 validation deadline. The EITI Secretariat granted the D.R.C. a 6-month extension (until September 9, 2010) to complete validation. The report was subsequently validated by the independent auditor, approved by the National EITI Committee and transmitted to the President of the International EITI Secretariat in Berlin, Germany on September 8, 2010.
The validation of the first EITI report was hailed as an important step toward improving transparency and accountability in D.R.C.’s management of natural resources. On December 14, 2010, the EITI Board designated the D.R.C. as a candidate country that is “close to compliant” and gave the D.R.C. 6 months (until June 12, 2011) to complete the remaining steps in order to achieve “compliant” status. However, the D.R.C. did not meet its requirements and was given an 18-month extension until March 2013, by when it must become compliant or withdraw from EITI consideration.
A number of initiatives have been launched at the national, regional, and international level to promote greater control and transparency of the minerals trade in eastern D.R.C. The U.S. Financial Reform Act of 2010 contains provisions related to minerals sourced in the D.R.C. Specifically, these provisions require companies whose products contain certain minerals to disclose to U.S. regulators whether they are sourcing these materials from the D.R.C. or its neighbors. They must also document their due diligence to ensure that their sourcing arrangements are not benefiting armed groups.
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