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Cablegate: Drc/Zambia Copper Belt Booms, but Governments Meddle

VZCZCXRO6104
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHKI #0515/01 1630522
ZNR UUUUU ZZH
R 110522Z JUN 08
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 8106
RUEHLS/AMEMBASSY LUSAKA 1456
RUEHSA/AMEMBASSY PRETORIA 4083
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEHBJ/AMEMBASSY BEIJING 0081
RUEHBY/AMEMBASSY CANBERRA 0031
RUEHLO/AMEMBASSY LONDON 0162
RUEHMO/AMEMBASSY MOSCOW 0054
RUEHFR/AMEMBASSY PARIS 1191
RUEHOT/AMEMBASSY OTTAWA 0117
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHZO/AFRICAN UNION COLLECTIVE

UNCLAS SECTION 01 OF 05 KINSHASA 000515

SIPDIS
SENSITIVE

STATE PLEASE PASS USAID
STATE PLEASE PASS USGS
DEPT FOR AF/S, EEB/ESC AND CBA
DOE FOR SPERL AND PERSON

E.O. 12958: N/A
TAGS: EMIN ENRG EINV EIND ETRD ELAB CG ZA SF
SUBJECT: DRC/ZAMBIA COPPER BELT BOOMS, BUT GOVERNMENTS MEDDLE

REF: A) LUSAKA 349 B) LUSAKA 376 C) KINSHASA 294 D) KINSHASA 406 E) LUSAKA 344 F) 07 KINSHASA 1133


1. (U) This cable represents innovative reporting and commercial
advocacy collaboration between Embassies Pretoria, Kinshasa, and
Lusaka.

2. (SBU) Summary: International companies are investing in
ambitious mega-projects on both sides of the DRC/Zambia
copper-cobalt belt, despite significant government interference.
The region represents the world's second greatest source of copper,
after Chile, but it is widely viewed as possessing richer
concentrations than Chile. The region is the world's greatest
source of cobalt, which has suffered related price volatility.
Companies are racing to bring on-line new production to take
advantage of robust prices and demand, as well as to beat
competition and political risk. Companies face significant risk
from regulatory uncertainty, transportation/logistics, power
supplies, and skills shortages. Zambia is marginally ahead of the
DRC in the competition for the dubious title of greater government
interference. DRC faces greater transportation, power, and skills
challenges. Western companies are advancing high standards for
social/skills development and safety/environmental standards.
Chinese and Indian investors do not follow the same standards, but
are promising significant infrastructure investment. The
sedimentary-hosted geology is complex; there is no standard
cookie-cutter mine in the copper belt, and the newest developments
are increasingly situated outside the traditional belt's
infrastructure and geology. End Summary.

Geological Wonderland
---------------------

3. (SBU) The African copper-cobalt belt (or Lufilian Arc) hosts an
incredible quantity and variety of sedimentary-hosted oxide and
sulphide copper-bearing deposits with associated cobalt. It is a
world-scale deposit on a par with the South African Bushveld for
platinum and Witwatersrand for gold. Reasonable geologists can
debate for a long time on the complex geological phenomenon of
sedimentation and the successive infiltration of salts, oxidants,
organics, and other chemicals, in advance of tectonic action that
formed the unique deposits at each mine. Each mine deposit requires
a unique mining approach and chemical processing to extract an
intermediate or final copper product for sale. But, this is usually
the easy part, compared to grappling with government interference
and logistics in and out of the mine.

4. (SBU) Embassy Pretoria Mining/Energy Officer and Specialist
visited mines on both sides of the DRC/Zambia copper belt May 12-23
to assess developments in the sector, covering six mines in the DRC
and four in Zambia. These mines represent the "A-list" of
international investors and eventually will generate over one
million tons of copper production per annum - with significant
quantities of higher-value cobalt. Embassy Kinshasa Economic
As

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