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Democratic Republic of the Congo Mining Report Q3 2016

  • June 2016
  • -
  • Business Monitor International
  • -
  • 63 pages

Includes 3 FREE quarterly updates

BMI View: The DRC's mining sector will be supported by the country's vast high-grade mineral reservesand strong mining project pipeline. Despite this, low mineral prices, mineral policy uncertainty and unrestin the east will limit investment growth.Latest Developments & Structural Trends

- The country's regulatory uncertainty remains a key concern to the sector's long-term growth. Ongoingmineral policy uncertainty could deter new investment from entering the sector and halt new projectsfrom coming online.

In our view, a production growth slowdown would have considerable effects withinthe country.

- On May 9 2016, Freeport McMoran announced the divestment of the firm's Tenke Fungurume coppermine to China Molybdenum for USD2.7bn as the firm intends to reduce its debt load.

- On January 13, 2016, Gecamines and the China Nonferrous Metal Mining Company (CNMC) signeda non-binding memorandum of understanding to build factories at the firm's two existing mines, thatcould boost the current annual output of 15,000 tonnes (kt) of refined copper to 100kt at full productioncapacity.

- Glencore's September 7 2015 decision to suspend operations at the firm's Katanga mine will significantlyimpact DRC's copper production growth. In our view, DRC's copper production will decline from 1.10million tonnes (mnt) in 2014 to 1.05mnt in 2016.

- Although gold output growth will be boosted by major miner presence, low production costs and a solidproject pipeline, low gold prices will dent the sector's growth. We forecast DRC's gold output to growfrom 1.0 million ounces (moz) in 2016 to 2.62 moz by 2020. This would represent average growth of22.8% y-o-y during 2016-2020.

- Continued gold price weakness will offset some of the sector's gains and limit a share of investment fromentering the sector. Weak global gold prices will hurt producers' profit margins and force producers toimprove operating efficiency and lower production costs. We forecast gold to average USD1,1275/oz andUSD1,350/oz in 2016 and 2017, respectively. This is significantly lower than the average USD1,427/ozduring 2010-2014.

Table Of Contents

Democratic Republic of the Congo Mining Report Q3 2016
BMI Industry View 7
Table: Congo (DRC) - Mining Industry Value Forecast 7
Latest Developments and Structural Trends 7
SWOT 9
Industry Forecast 11
Copper: Growth To Ramp Up In The Long Term 11
Table: Global Copper Production Forecast (2014-2019) 11
Latest Developments 11
Table: DRC - Copper Projects 12
Structural Trends 13
Risks To Outlook 15
Gold: Growth To Remain Strong 16
Table: Gold Production Forecast (Congo (DRC)) 16
Latest Developments 16
Industry Risk Reward Ratings 20
Democratic Republic of Congo - Risk/Reward Index 20
Rewards 20
Industry Rewards 20
Country Rewards 20
Risks 20
Industry Risks 20
Country Risks 21
Africa - Risk/Reward Index 21
Key Takeaways 21
Latest Revisions 22
Table: Africa - Mining Risk/Reward Index 23
Regulatory Development 24
Trade And Investment Risk Analysis 26
Commodities Forecast 29
Commodities Outlook 29
Table: BMI Commodities Price Forecasts 29
Competitive Landscape 30
Table: Congo (DRC) Key Players - Comparative Valuation Metrics 31
Company Profile 32
Global Company Strategy - AngloGold Ashanti - Q3 2016 32
Table: Select Commodities - Price Forecasts 34
Company Strategy 36
Table: AngloGold Ashanti - Key Financial Data 37
Global Company Strategy - Randgold Resources - Q3 2016 38
Table: Select Commodities Forecasts 40
Company Analysis 40
Latest Financial Results 42
Table: Randgold Resources - Key Financial Data 44
Freeport-McMoRan - Q3 2016 45
Table: Select Commodities - Price Forecasts 47
Table: Freeport McMoRan - Key Financial Data 52
Regional Overview 53
Table: SSA - Government Involvement In Mining Sector 58
Methodology 60
Industry Forecast Methodology 60
Sources 61
Risk/Reward Index Methodology 62
Table: Weighting Of Indicators 63

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