BCDC has experience operating in the DRC that extends over 100 years. How have you seen the impending election and new mining code impact investor sentiment and what role is the Bank currently playing to assist clients with mitigating the associated risks? 

The new mining code will have concrete consequences for the mining companies, such as new amounts to be repatriated and new tax measures. On the top of that, the political election scheduled to take place at the end of the year contributes to an atmosphere of uncertainty in the DRC. 

For over a century, BCDC has been involved with most of the significant mining assets in the wider Katanga region, and we are therefore closely monitoring these developments. It is really important to closely follow the global situation in order to provide the advisory services required by our clients in order to secure best their interest.

BCDC helps its clients mitigate risk all the way from the exploration stage into production. Can you elaborate on the most common risks your clients encounter and how BCDC can provide assistance?

Large-scale mining investment takes place outside the country. Congolese banks can best assist international investors by helping to navigate challenges around complex regulation of DRC. This is critical given the huge investments made by the mining companies in DRC and the penalties associated in case of non-respect of the rules. BCDC is then particularly adept in assisting in following their import and export processes. From the importation of goods in support of production to the exportation of the ore, licenses must be opened by the Congolese banks in order to validate the process and allow importation and exportation. This could be seen as easy but it comes with considerable paperwork to deal with and a close follow-up by the bank of the various obligations associated. For instance, almost half of our total staff in Lubumbashi is implicated to this import-export process.

Can you elaborate on how the new mining code will impact the customs clearing process?

A reality of the DRC custom clearing process is the fact that most transactions are pre-financed by the clearing agency. It means that the clearing agency needs banks to allow them to pre-finance their clearing transactions on the behalf of the mining client. BCDC has always been a key partner in order to provide such facilities. Nevertheless, with the implementation of the new mining code and the new taxes measures associated with the reintroduction of the VAT on imports, the amount to pre-finance might be too high regarding the size of Congolese banks. This will need to be taken into account in the next discussions between clearing companies and the mining companies.  

How are mining companies coping with the large power deficit in the DRC, and to what extent can the local banking sector play a role in financing power-related projects?

Many of the mining companies are engaged in their own generation projects to power their activities. Most of the time, this includes rehabilitation of ongoing infrastructure owned by the public electricity company called “SNEL“. This kind of deal could be concluded through an agreement with SNEL in order to pre-finance the project in deduction of the future invoice to be paid to SNEL by the miners. National banks can play a role of advisors in order to smooth the operation and the negotiation.

How has the influx of Chinese investment impacted the Congolese banking sector?

We have been closely watching the ongoing trend in Chinese interest in the region. This movement of Chinese investment into the DRC is mostly related to their interest in cobalt. It’s seen as a strategic move in order to secure their future investment saying that cobalt would be one of the next strategic commodities. Given the fact that most mines in DRC are now operated by Chinese interest, it represents a shift to the sector and we have to adapt to it. For instance, BCDC has recently hired a Chinese officer in Lubumbashi and a BCDC delegation is just back from China.

What final message would you give to our international readership about the reality of operating in the DRC?

The international community is closely watching the DRC because the country contains huge deposits of copper and cobalt. Cobalt could play a globally significant role in the rapidly growing green industries. The run on cobalt price is vertiginous with the largest reserves known in the world based in DRC. Whether we want it or not, DRC is a strategic place for the next coming years. A strong political vision and pragmatic approach from different companies will help to bring up DRC’s overall economy and standing. This compromise between the mining community and the DRC will create a win-win dynamic that respects the development needs of the local population, while continuing to attract mining investors from around the world to promote sustainable growth.