Chetan Chug, Managing Director, SOMIKA

Diversification and a long-term perspective critical SOMIKA’s success.

Could you provide brief update on the major milestones that SOMIKA has achieved in the past few years?

Since 2016, SOMIKA has managed to acquire mining rights closer to Lubumbashi. Additionally, we have begun mining with a process plant that brings the ore from two percent to ten percent grade. Now that SOMIKA has a fully installed capacity for 20 thousand tons of copper cathodes and two thousand tons of cobalt hydroxide production, our production will reach full capacity in 2018. We have several expansions we are looking to accomplish in 2018 as well. SOMIKA is looking to have its  own sulfuric acid plant at the site of PE 2590, a mining site, that will allow our company to grow by gaining greater independence in our mission to achieve full integration through our operations. In 2018, at the site of concession PE 2590 SOMIKA has a planned expansion of 20000 Mt of copper cathodes production. KIMIN is planning for an expansion of 20000 Mt copper cathodes and 2500 Mt of cobalt hydroxides in 2019.

How did SOMIKA adapt its strategy during the downturn of commodity prices?

When the larger crash in copper price happened between 2008-2009, SOMIKA quickly diversified into other minerals such as tin and tantalite to expand our portfolio and reduce our exposure to the risk associated with commodity prices. By this point, SOMIKA was no longer just a company, but also a family. One of our goals was to retain as many people and jobs as possible. In 2016 the strategy we adopted when the prices lowered was to immediately look for ways to improve our operations in certain areas to obtain better recoveries. We worked on improving the management, the training programs and various other areas.

What are SOMIKA’s objectives for its other projects in commodities including tin and tantalite?

Over the last two years, our concessions in the tin and tantalite projects have become more mechanized. One is mechanized fully and the other should be in production by next year. We do see strong opportunities in tin and tantalite, and three to four years down the line we would like our production to be four-fold while at the same time developing the surrounding areas with schools and health clinics, and improving ore recoveries.  Going forward, SOMIKA plans to expand into lithium, tungsten , zinc, lead, and manganese as well. We have already found lithium in our tin and tantalite concession, which we plan to explore further in 2018.

How can the new mining code better address concerns that SOMIKA has experienced as a long-term player in the DRC market?

I believe the existing mining code has functioned reasonably well in terms of the royalties, the fixed tax and the mining product and export laws. The new code proposal shows an increase in those costs, which I believe could have a detrimental impact. Today this industry needs continuous investment and exploration to augment its life or just to maintain its current state. SOMIKA and other businesses also increasingly need to ensure that we retain enough funds to spend on our exploration , environmental and social responsibilities. It is important that there should not be any extra taxes or charges that can hamper our opportunity to grow and assist in meeting our obligations to the community and the environment.

How will SOMIKA adapt its management strategy to proposed changes in the mining code?

As the proposed changes have not been finalized or put into effect yet, we are hoping the government remains moderate in their decisions. Mining is quite capital intensive and the more moderate the final proposal, the better it will be for all mining companies to attract foreign investors and to maintain a higher budget for exploration, social and environmental responsibilities.

What initiatives need to be put in place in order to establish greater level of local participation within the mining industry?

There need to be more training programs, especially linked to the specific areas of mining, such as processing and the metallurgical aspects, to assist people in better understanding how all of the operations work. Once that is accomplished, there could be a specific certificate program that can be obtained after a certain amount of training is completed. If such certificate programs could be effectively implemented, I believe it could increase higher paying employment opportunities for the Congolese.

How do you achieve a successful long-term strategic approach when operating in DRC?

To have a greater chance at success, you need to view the DRC as your home. If you come in with a short-term mindset with an objective of merely making fast money, you might succeed for a short amount of time but you will miss out on the long-term benefits. Ultimately it is all about your connection with the place and people that will assist you in finding long-term success.

Based on SOMIKA’s experiences, what would you say to investors about the opportunities in DRC?

The country has shown a consistency over the last 15 years in terms of its overall acceptance  of international investment and growth within its people. One should not worry about the politics because this is an issue not just found in DRC, but throughout the entire world. Every country has its disadvantages as well as its opportunities, and it is critical to observe the interest of the local population to gauge how well your project will be received. In that regard, a significant strength of DRC is its people and their understanding of the benefits that mining can bring. Over 70 percent of resources remain untouched in DRC, and the opportunities are vast here if one takes a long-term perspective and an unbiased approach.

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