DRC finance minister talks mining, smuggling and building batteries

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Good afternoon, everybody. I'll just give you a moment to take your seats. This promises to be a fascinating 20 minutes.

I'd like to present to you minister of finance from the Democratic Republic of Congo, Nicolas Kazadi. Minister Kazadi has been in the Finance Ministry since 2021, but that's the end of a long and... oh, the end... this is the latest phase in a long and distinguished career.

He started out at the Central Bank in the '90s when Mobutu was still in power, then spent much of the 2000s and the 2010s working in international development at the African Development Bank and then at UNDP and then came back into government when President Felix Tshisekedi was elected in 2019, initially serving as an adviser with the presidency and now at the Finance Ministry.

I am a closet Congo enthusiast/follower. I first visited the country in 2007. I've followed everything there for the last 15 years. I lived there from 2015 to 2017.

I probably have spent more time studying Congolese mining companies than I should have. So, for me, personally, it's great to be able to have this conversation with the minister. I've got dozens of questions. I'll try and keep them short, and we will try and get some answers.

Minister, I wanted to start with copper and cobalt. Obviously, Congo is Africa's biggest copper producer. It's the source of 70 per cent of the world's cobalt. Last year, copper production was up 33 per cent, so you produced a massive 2.4mn tonnes.

Cobalt production was up 24 per cent - 115,000 tonnes of cobalt. What's the plan this year? Can you keep growing production, and is that the objective?

Yeah. First of all, I would like to apologise because I made my best to be here. In the meantime, I lost my voice because of cold.

Yes, in fact, the objective is not only to increase production, but the objective for us is to get more added value locally. That's the main objective. But, as you know, we are still increasing production.

By 2030, I think, on copper, we will reach close to 5mn tonnes of copper. And cobalt, I cannot say so far, but we still have the room. We are still increasing production. But, unfortunately, it is still raw material that we are producing and exporting. Our objective is to transform it locally.

I mean, with that in mind, recently you signed a agreement with the Zambian government supported by the United States. The long-term objective there is to build a full battery supply chain in Congo. How viable is that?

Yes. I think, in that regard I can say that we are at a crossroads. If we miss that it will be like we are missing our development. You know that the Bloomberg study that was done one or two years ago... it showed very clearly that we have a comparative advantage.

Doing those batteries locally is more profitable than doing it in the US or in China. So we have to take that advantage. And, so far, we are going very well. We have established... we have set up the Conseil Congolais de la Batterie, an entity which is in charge of that.

So, for the time being we are designing a master plan to know exactly what are the needs - private investment, public investment, and all the needs that will lead to that. It is something that can change the economy completely because, now, the revenue are growing. Production is growing. GDP is growing.

We have been the fast-growing economy in Africa last year, but we don't see a decline in poverty. Poverty is still very high. Even if the average poverty is declining, the number of poor are still increasing. The only way to change that is to have that transformation, local transformation.

I think it's the right... it sounds like the right objective, but Congo doesn't have a great track record of delivering these projects. So you think of a big project like Grand Inga, it's been on the books for years though it hasn't happened. And if you think about the recent efforts to formalise artisanal mining in the cobalt sector, like EGC, again EGC was conceived. It was announced. Hasn't really progressed. On EGC, what's happening with EGC?

Yes, but before I... it's important...

Sorry. Go ahead.

...to let you know that. Now, we are not talking about big, big project that we cannot afford. I see my friend Benedict there. He can tell you that he's currently... they are building the biggest plant transforming cobalt in Africa... I can even say in the world.

It will add up to 40 per cent of the value of the cobalt produced in Congo is for export. It means that we are talking about reality. We are in the move. Now, you are talking about EGC. Yes, it's very important point.

EGC is to better manage the smuggling of cobalt, and there is a problem in that area because what is happening in that sector now is below all the standards - social standard, environmental standard. And, as a result, we don't get the value for the cobalt. We are the first producer of cobalt, the first reserve of cobalt.

We see the increase of the demand of cobalt at the world level, but we continue to see the decline of the price just because we are not able to manage it accordingly. And that's why it is very important to get it to the EGC, which took a long delay. We have to speed it up.

I mean, recently, there were some management changes at Gécamines. So there's a new chairman of the board. There's a new director-general. Is one of their responsibilities to get EGC going?

No. It is a long journey. It was not very easy. But, now, it is very clear that there is a consensus of all the stakeholders that we cannot delay this process any more. We have to speed it up because it's a strategic subject for the country.

It's interesting to hear you talking about the need for Congo to extract greater benefit from the minerals that have historically been exported. One of the flagship initiatives that President Felix Tshisekedi has taken since he came into power was his willingness to challenge some of the existing Chinese investments in the country.

So he began a review of the famous Sicomines deal. What was the... why did he do that, and what's the status of that?

Yes, but it should be done in the right way. It is not about challenging Chinese investment. It is about challenging investments that are not fair. And it is not only with Chinese.

We have some issues with others, also, but the Chinese are the most important players, currently, in the country. And we are trying to fix two or three major issues that we have with their companies, which are very important to the country.

And as I always say, we should not see it as a political issue. It's an economic issue. We are discussing with the Chinese. I'm sure that we'll get to an agreement with them.

But what is clear is that what happened in the past was not fair because those who negotiated those agreements were not well-informed on the situation. And, now, it is clearly... it is very obvious that it was not fair, and we all agree on that. The only thing is that we have to close the negotiation.

But I think it was interesting for me to see that the Zambia DRC agreement has - for developed battery supply chains in Congo and Zambia - is supported by the US government because, five years ago, one might imagine that that initiative would have been supported by the Chinese government.

Yes, but the only thing I can say on that is that it is not in our interests to have to put all our eggs in one bag. To have more transparency in this business, it is important for us to have a more balanced partnership.

And, in that regard, it is clear that we need to get to that. And I think, on the transformation, local transformation, we can balance a little bit of our partnership when it comes to cobalt and copper.

And my final question on the engagement with Sicomines. Is your sense that you will be able to review and, where necessary, renegotiate those terms whilst not damaging Kinshasa's bilateral relations with Beijing?

No. As you know, China is a very big player at the world level, even for your countries, for any country. But it is clear, and I make it very clear, that it is not in our interest to put all our eggs in one bag. For now, they are controlling all the mines in... especially in cobalt.

But we think that, as we need transformation it is an opportunity to balance a little bit our partnership. But China will remain a key partner for the country and for Africa and even for the world, I can say.

Another specific question, not about Sicomines but about another Chinese investment. I think a lot of the room will be interested in the status of the ongoing dispute between Gécamines and Tenke Fungurume specifically with China molybdenum, over the tax payments the Congo argues it is owed.

Yes.

So, at the moment, I mean, according to the latest stats, there's about 120,000 tonnes of copper sitting at that mine, 12,500 tonnes of cobalt sitting in that mine, which can't be exported. Can you tell us anything about how close you are to a resolution and when that mess will be able to resolve?

Yes, there is a big issue on the way the they have calculated the reserve of Tenke Fungurume Mine at the beginning. And it is now clear that the figures that they gave at that time were not real. And the thing is that this comes not from the Chinese themselves.

The Chinese. They took over after the US-based company or Canadian company, which is Freeport. And it started with Freeport. The problem started with them, and the Chinese took over. But now they have to fix that because they are the owners.

And what's the timeline? Do you think that will be resolved in the next month, six months?

We hope so. We have a good discussion. I think you know, now it is getting at a higher level, as you know. Recently, the deputy minister of foreign affairs from China was in Kinshasa. I think there are some discussions at the highest level. I think we can get a solution very soon. We hope to have that before the... during this first semester of the year.

To change subject slightly and move to a different part of, another part of your enormous country, President Tshisekedi has also been quite vocal about Rwanda's role in what he says is a destabilising role in eastern Congo. And what I'd specifically like to ask you about is alleged smuggling of gold, of considerable amounts of coltan across the border.

I mean, as long as I've been studying Congo I've heard about allegations of that, but you very rarely hear someone put a financial figure on it. Is it possible to estimate either how much money Congo loses or how much money Rwanda makes from that?

Yes. As you know, only for last year Rwanda exported close to $1bn US of gold and et cetera. But, as you may know, they don't have any coltan in the soil, so it all come coming from DRC. That is obvious. That's not about allegation only. It's evidence.

And to give you an example, we have started a new partnership with the EAU. And only we started in January. We set up a GV with the EAU, which is called Primera, Primera Gold, and we started in January.

From January to now, we've made seven operations of export which reach 454 kilos of gold in a very limited period of, let's say, two months. Last year, for the whole year, the same region exported only 27 kilos of gold for the whole year because everything was going to Rwanda and sold in the EU and elsewhere in the name of Rwanda, while it was coming from DRC. And we had no information on those exports from our country.

And I saw the previous panel was talking about navigating sanctions. We are still talking about a country invading another country. We have the same situation in DRC. And what we are trying to do now with the Emirates is one of the responses that we are giving on the economic side, while we still need other responses, including sanctions. But we are still waiting for those sanctions.

So just to be clear, you are calling for sanctions on Rwanda for their role in eastern Congo?

It's obvious because now it is made clear that Rwanda is behind the M23 so-called rebels. They are the ones who are invading the country. The main reason is just to continue to operate in the mining in the region that goes to the border. And that's the reality.

And, now, it is... even the UN have stated that very clearly. Now, we are very surprised to see that there is no sanction, not even just - how can I say it - not even the beginning of sanctions. This is also not fair at all, and we must know what kind of world we want to build.

We have done our part. We have shown the most voluntary commitment to have good relations with Rwanda. We have even proposed, we have even signed with them, in 2021, an agreement to exploit those mines, coltan and gold, jointly.

But it is clear that, for them, it was not profitable enough. And they preferred to go on smuggling and continue the war. And all this coltan is sold outside - is in your telephone, in your iPad, in your telephone, until today. That's the reality.

To move to another mineral which Congo has and which is probably also in my phone, lithium. Congo has got a big potential lithium project in Manono. It's also been in the news for various reasons. There's been a dispute with one of the owners, AVZ Minerals. As I understand it their licence has been cancelled. Can you tell us anything about what Congo plans for that deposit?

Yes. That was done a bit... it was not very, very transparent. It was not to the best of our interests as a country. That's why we went back to it. But I would... I don't like to say more on that because it is still on.

If I can indulge a personal interest of mine, I've studied the life of an Israeli investor called Dan Gertler who's been associated with Congo for a long time. He was sanctioned by the US government some years ago.

The Congolese government reached a deal with him last year, whereby he is going to return a series of his assets to Congo. I think Congolese government is going to pay him some money - $252mn. He's going to pay Gécamines some money - about 192mn euros, and he hopes that that will basically cleanse his record.

I mean, one thing I think he wants is for the Congolese government to then ask the US government on his behalf to lift those sanctions. Is that something that Kinshasa is willing to do?

No. We should be very pragmatic. We have so many issues in our country, as you may know. For us, what is important is to get back those assets which were in the hands of Gertler and to be able to get to operate those assets. That's what's the priority for the country.

And there was a time for sanctions. And the sanctions, the US sanctions against Gertler have been helpful for the country in our political journey because at that time it was necessary. But there is a time for sanctions, and there is a time to do something different.

And, for us, as a country, the priority is to operate those assets - to get money, to get revenue for our people. And I think we are close to an end on that, and we have made it clear to our partner, the US, the US who are our strategic partner. We are very close to them on those issues. And we think, we hope that we will get to a close on that case, that Gertler case.

I think just...

I don't know if I missed something. If you...

No, no. No, I think you answered that fully. Let's see. We haven't got much time left. Let's see if there's one, very short question from the floor. And if there's not, I will ask you another question because I have dozens on my sheet.

Does anybody have a question for the minister? Excellent. I can ask another one. Carbon credits. Last year, there was a proposal from a US investor DClimate to build a nationwide carbon sequestration database. That hasn't happened yet. There were some problems with that deal. Just kind of interested, big picture, in Congo's plans to try and monetise the carbon zero that is Congo's aim.

Yes. The thing is that, in that area and in some others, we are in lack of capacities. So, sometimes it's not easy to go to a deal very quickly because we are not sure that what we are deciding is good. On carbon credit, the prices are very low, especially when it is about Africa.

So, sometimes, we are not sure that what you are doing is a good decision because maybe, after some time, the price will go up. And these are the kind of problems that we have. So we are building our capacities to ensure that what we are signing is a good deal for the country. But it is clear that our country has a big role to play regarding carbon sequestration and all this.

Just one final question. I've been jumping around about this. I'm going to bring you back to copper and cobalt and Katanga. You had 2.4mn tonnes last year. You'd like to increase that to 5mn tonnes by 2030.

But one of the biggest brakes on increasing production is export. So, at the moment, as anybody in the mining sector knows, it all goes across the border of Kasumba Lesa in this long, crazy line of lorries out towards Tanzania and South Africa.

I mean, there is a plan, I believe, to develop the rail corridor out to Lobito. I mean, Trafigura, who probably are in the room, I mean, they've got a licence to operate the Angolan side. What's the plan for developing that rail corridor from Congo to Dilolo at the border? Who's going to do that? Who's going to operate it?

Yes. No decision has been taken so far. We are know that, I mean, I know that we are in discussion with Trafigura and with others. But, as I was saying, we are at the crossroad.

If we don't take this opportunity of growing export of raw material to build our infrastructure, which are missing, the country is... the main challenge of the country is logistic and, second, in transforming locally to accelerate poverty reduction. If we miss that we are dead. So it's very important.

And now we have the opportunity to do that. We have very good discussion with our partners. And I think that, very shortly, we will get to another step, another level on those projects - not only the railway but also the road. But our objective strategic is not only to go to Lobito because part of the mining can be exported to Lobito. It's 1.8... 1,800 kilometres, I think.

But we also have the national route which goes with - you have road or rail. You have the river and the railway again to the sea. That is the national route. It's like 2,000-and-something kilometres.

It is the best one for us because it will give us the opportunity to build a value chain from the mining area to the west side of the country, which is missing. Now, you see in the centre of the city there is nothing. We should take this opportunity to create activity, economic activity to go all the way to the sea.

Fantastic. That's a good vision and a good thing to end on. Minister, thank you very much for travelling all the way to be here with us.

And ... the other reason.

Go ahead.

We have to go to the west because, now, we are exporting 90 per cent to the east. Our hope, our strategical vision is to transform and start selling to the west side. That's why it's important for us to build infrastructure from the east to the west.

Yeah, true, because you don't need to send batteries to China. You need to send batteries to the US and Latin America.

Exactly.

Fantastic. Minister, thanks very much. Love talking to you.

Thank you.