DR Congo's $24 trillion fortune.

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The total mineral wealth of the Democratic Republic of Congo (DRC) is estimated to be some $24 trillion--equivalent to the GDP of Europe and the US combined, but this vast region, larger than the whole of western Europe, remains staggeringly poor and underdeveloped. The country's mineral wealth is also the principal cause of the world's worst conflict since World War II. A peaceful DR Congo could transform Africa almost overnight, but is there a way out? M J Morgan reports.The conflict in Eastern Congo remains as misunderstood, ignored and all but as forgotten as ever. The worst, in terms of loss of life, as well as the longest war of the 20th century, it has been waged for some 20 years and has cost, in the last decade alone, according to the International Rescue Committee, around 4.5m lives (roughly the size of Denmark's population).[ILLUSTRATION OMITTED]This death toll amounts to around 45,000 fatalities a month, making it equal to the most pessimistic estimates of the loss of life caused by the invasion and occupation of Iraq, not too mention substantially more sustained. This represents a mortality rate 85% higher than for the rest of sub-Saharan Africa (SSA) as a whole. However, a search on Google reveals more than 120,000 articles about Iraq yet less than 25,000 about Congo.Extraordinary Mineral WealthThe latest violence is an expression of the greed to exploit DR Congo's extraordinary wealth. Congo's coltan is often identified as a major cause of the fighting. According to official figures, the country produces only 1% of the world's coltan, the colloquial name for the chemically similar columbite-tantalite and niobium ore, used to manufacture capacitors and the country's most profitable export, but the actual share of global coltan output may be much higher. DR Congo possesses some 80% of the world's coltan ore reserves. The rewards for whoever ultimately controls the reserves are unimaginably vast.Additionally, the DR Congo produces significant quantities of diamonds, gold, cassiterite, copper, cobalt (of which it has the world's largest reserves, although the trade is largely controlled by Zimbabwe), oil, tin, zinc, gold and coffee. The country has large reserves of uranium: it was Congolese uranium used for the Manhattan Project that produced the world's first atomic bombs dropped on Japan. The vast country also has more than half of sub-Saharan Africa's timber stocks.The country's principle mining concern is La Generale des Carrieres et des Mines (Gecamines) and its most valuable export is copper. Due to the incessant and savage fighting over recent decades, copper output has fallen from over 440,000t in 1989 to around 16,000t in 2003. In 2008, copper exports rebounded to around 365,000t.[ILLUSTRATION OMITTED]Vast copper reserves, proven and probable, exist in the recently more peaceful Katanga province. But 45 of the 75 copper and cobalt treatment plants have closed in the province. Production has fallen from forecast levels as the world price for the metal fell, and mines closed. Copper ended the year around $3,000/t, down from a high of around $9,000/t.Cobalt production for 2009 is estimated at 32,000t, half that forecast before prices collapsed as demand for electronic goods evaporates. Cobalt cathode ended the year around $16.50/lb down from a March high of $52.50/lb.Commodities giant Glencore, dominant in Congo, has announced a $265m emergency loan, in the form of convertible debt, to Katanga Mining. The company, the world's largest producer of cobalt and Africa's largest producer of copper, has seen its shares lose 98% of their value on plummeting prices of both minerals and unless the company can raise a further capital this month, the bullish Glencore will assume a controlling stake.Rival Camec, owner of the world's reputed biggest single cobalt mine, whose shares fell 90% in 2008, announced last November the mothballing of its copper and cobalt operations in DR Congo, citing the collapse in prices and faltering Chinese demand. The Chinese government, however, has announced a $9bn investment in DR Congo, $3bn for mining projects and $6bn for infrastructure to build 2,400 miles of road, 2,000 miles of railway, 32 hospitals, 145 health centres and two universities.In return, China will receive some 10m tonnes of copper and 400,000 tonnes of cobalt. The Kinshasa government has welcomed the deal, saying that it comes with far fewer strings than previous aid deals, but critics argue that China will reap a lion's share of the investment dividends.It has been estimated that the mineral reserves of DR Congo are worth some $24 trillion--equivalent to the GDP of Europe and the US combined.The country has just completed a long-awaited review of 61 mining concessions, many of which had been negotiated in the highly unstable period 1996-2006.This raises the prospect of an increased share of mineral profits for the impoverished country. No fewer than 57 of the companies involved have accepted the principle of renegotiation of their contracts with the current government and diluting their average 83% share of profits to something approaching a 50/50 split. The government remains optimistic the remaining companies will shortly follow suit.Victor Kasongo, Congo's deputy minister of mines, has said that such an arrangement was "based on the standard international practice of countries such as South Africa and Zambia" although the September announcement of the privatisation of state miners such as Gecamines (copper) and Okimo (gold) may well be kept on hold for the time being.In the short term, duties on exported minerals may be lowered to encourage falling exports. The review took place in response to a UN report in 2000 that found that some companies had paid bribes to secure contracts from the government or local warlords, and linked ongoing conflict in the country to control of resources. The changes this review would usher in would increase state revenues from around $25m to some $184m.[ILLUSTRATION OMITTED]In 2002, the DR Congo signed up to the Extractive Industries Transparency Initiative, which requires all revenues and payments by mining companies to be made public, assuaging at least some of the concerns about state corruption. This move is credited with attracting some $2.1bn in capital investment in 2006 and 2007.The DR Congo posted GDP growth of around 6% in 2007 but the lack of infrastructure remains a critical problem and further growth appears difficult even in the event of a significant reduction in violence.In a televised address, the DR Congo's President Kabila said: "Our objectives for 2009 will be and remain those given to the government when it was formed. First and foremost is the consolidation of peace and security, in particular in the east of the country." But until significant attention abroad is paid to the plight of the people of DR Congo there is little chance of anything other than a continuation to the world's most brutal war since 1945.