DRC 100m from US and UAE “Paramilitary”
….to protect the mines.
By Tshepo Magagane
A pantomime of the leopold-era for SNL.
Sierra Leone first lady put it best “for every USD100m of minerals that leave the country, we get USD10,000”!
Protecting the Congolese Minerals from the Congolese who own them.
The DRC can never have peace until the Congolese have peace.
This goes back to the Sun City agreement – the East has to recognise Kinshasa as a government – therefore Kinshasa has to first be a government to the East.
Let me not just criticise, what are the solutions – DRC produces 3,4Mtpa Copper, at current prices that is cUSD41 revenues (and using grades, not reported numbers should easily be USD30bn FCF – duration of 10 gives USD300bn, Gecamines at 20% = USD60bn – I understood about “currency creation” even before moving to the buyside eg Royal Bafokeng / Implats Royalty to Equity Conversion – model still somewhere in my systems from junior years)
1. An agreement with the South African Revenue Service (SARS) to build tax authority in DRC
i. SARS is one of the leading tax authorities in the world – I would say most feared with the IRS being decimated
ii. Past decade they double the tax take in SA with the economy growing at 1% pa (half of those years the height of “state capture” and the other half a rebuild
iii. SAICA and SA tax accountants leading globally – practice notes as a junior on “excessive interest deductions” “inter-company loans” or simply see how recently they went after Glencore on diesel
iv. SAmerican mines have less than 20% of grades of Congolese mines yet reported AISCC is only a third of DRC – avoidance of doubt, IT IS IMPOSSIBLE (DRC cut-off grades are higher than grades from majors in SAmerica) or take East DRC project, ASX market ascribes a higher valuation with the mine surrounded by rebels
v. Therefore Infrastructure, Architecture and Skills Agreement with SARS (ST = secondment to SARS and the other way around with SARS seniors going into the DRC)
2. Ownership and Supply Chains
i. Existing Mines (Western and Chinese) – bring indigenous communities into ownership structure (not individuals yet, as we know what happened with BEE in SA) and plans to source supply chain in country
ii. New Licenses – simply indigenous led (and finding capital solutions for it)
iii. ASM – formalisation of artisanal mining (not just programmes, but capital – especially in the East)
All of this can be achieved in a short period of time, if there is vision and a plan (and good intentions) – Royal Bafokeng achieved mostly everything from 04 to 10! They control one of the largest Financial Institutions on the continent from that currency that created by swapping their Royalties into Equity, their influence extending all the way to Towers, Healthcare, Water, Renewables – they exited their own mining company at the height of PGM cycle – only residual is a 10% stake in Northam!
I attach an interview from this weekend with the outgoing SARS Commissioner – when there is Duty and Loyalty to one’s country – you can achieve so much!
