GBR meets with MMG to discuss its operations in DRC and what needs to be done to improve the business environment.
Looking at the current situation in the DRC, what does MMG believe needs to happen for the country to recognize its full mineral potential?
We need more robust conversations on how to improve the business environment to get investors excited, specifically by discussing how to support the large industries by bringing in smaller industries. There are not many small industries currently active in the DRC; most of them are sitting across the border where there is a more conducive business environment. We need to support the capacity of smaller companies to supply consumables and other items into the mining sector to promote a healthier industry overall. It is not the job for the mining industry to do grassroots development of these industries, however, discussion needs to happen between the private sector and the government to change the regulatory framework to the benefit of all the different industries.
How does MMG approach its relationship with the government in the DRC and how can the private sector best assist in improving the conditions in DRC?
We strive to be a leading positive influence and to promote constructive discussions about how to make improvements. The mining industry does not have the financial capacity to make these critical developments and it is the state’s responsibility to build the foundation for these industries. The mining industry would be the primary user of all these commodities from local businesses, but right now DRC does not have the right quality or quantity of product, equipment, people or businesses to keep the mining industry alive without importing.
How has the business environment in DRC improved since MMG started here in 2012?
There is still a lot of work to be accomplished, but there are improvements being made to the local infrastructure, although typically some provinces are favored over others in this respect. Nonetheless, there does not seem to be any improvement to the way of life of the general population. We pay our taxes and our royalties, but that money needs to go back into improving the country, the infrastructure and the business logistics, and that is where there is a breakdown.
What is your opinion on CSR (Corporate Social Responsibility) initiatives? What CSR programs have you seen working that need to be replicated by the mining industry?
Companies need to be cautious with the intent of their CSR because often these sorts of projects do not make significant improvements in the community. For MMG, CSR should demonstrate perpetuity and longevity; every dollar spent on the community today should have a knock-on effect for the community in the years to come. Globally, MMG has a yearly strategy where we look at different projects and decide where we want to put our money inside four different areas; education, health, sanitation and business acumen. We have our own social development department and we receive advice from experts in that field. In DRC, we have 20-30 villages with around 36,000 people deemed part of our surrounding community, and we have been able to transfer skills and knowledge — another critical component. We started off with fish farming and we had around seven dams; we now have 29 which the community was able to build on its own due to the transferred skills. Now they have not only a source of food, but also a marketable product.
As attention to environmental impact has become increasingly topical in the African mining industry, how has MMG shifted its policies and what sort of initiatives are present in the DRC?
We separate our waste into recyclable, non-recyclable and organic, but this is not continued outside our mine; there is no external recycling. Our waste oil is also recycled and refined to be given back to the local community to use as fuel. We try to recycle our tires, but the local businesses do not have the capability to re-use the rubber from them.
In 2015 the Katanga province became Haut-Katanga, losing the mining town of Kolwezi to the newly delineated Lualaba province. How has this change in borders impacted the DRC mining industry at large and AMS’s operations in the region?
Now that the province of Katanga has been split into four, Lualaba has the larger mining companies, while Haut Katanga has the smaller mining companies and the other two provinces have none. There are now four different government structures, which will make things more difficult for companies. The break-up may also have made things more difficult for the provinces in regards to their ability to re-inject capital back into deserving projects. There is also going to be more competition between the provinces, which may incur political action. Going forward, there are going to be significant problems with infrastructure if rail does not become functional because the only outcome is poorer roads.
Which aspect do you think will be the most challenging to overcome in remedying the issues you see in the current business environment?
The willingness of the government and companies to both make changes will present the greatest challenge. There needs to be more emphasis on searching for a common outcome because many of the industries that operate here are self-serving and want to enrich themselves at the expense of others. MMG wants to use the capital we have generated here to uplift the people while also providing a return to our shareholders. We need the government to demonstrate a readiness to work with companies as a partner and not create unnecessary punitive audits and fines. We need to work together to find out where the problems are and to fix them so we can create a mutually beneficial framework.
Kinsevere is set to close by 2024. What is MMG’s longterm strategy in the DRC?
We want to expand and remain in this area. We are actively exploring the field, but if we do not find anything or are not able to partner with another state miner, then we could be shutting our doors and going somewhere else. It is incumbent on the state miners to be more open and transparent. My investors find it tough to invest without certainty purely because of the business environment. Nonetheless, we want to invest in Africa, and our interest is in the Copperbelt region although not exclusively. MMG intends to become a $20 billion company by 2020. We have three years left to achieve this goal, and we see the ability to be successful in Africa.