Friday, November 14, 2008

Global Downturn Hits Congo Hard

The global economic downturn is having a devastating effect on mineral prices, with dramatic consequences for the stock value of mining companies doing business in Congo. According to Barry Sergeant at Mineweb:
The average weighted loss in market value for listed DRC/Zambia copper/cobalt miners . . . computes at 87%. Taking peak prices, all seen in the past year, the 18 stocks that fall into this category boasted an aggregate market value of USD 18.7bn. Today, USD 16bn of that value has evaporated into thin air . . . This battered bunch of 18 stocks is now worth a pitiful USD 2.5bn - in total, that is. First Quantum has surrendered 80% of its value; Katanga Mining, busy restoring the Kamoto and related mines, one of the greatest mining districts in the world, has seen 95% of its value go down the drain. Not so long ago, it carried a market value of USD 3.2bn; today, the comparable number is a paltry USD 144m.
Sergeant provides a very useful table showing the declining stock value of 18 mining companies doing business in the DRC.

Meanwhile, the Wall Street Journal reports that the continuing unrest in the east and the recent slump in commodity prices could swing the much-delayed negotiations between the government and international mining companies over concession rights in favor of the mining companies. Congo "has perhaps waited too long to clinch the deals, and the pendulum may have swung back in favor of the companies," said Patricia Feeney, executive director of Rights and Accountability in Development, a group that promotes corporate accountability. "Deals may start to unravel."

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