KATANGA'S ORE EXPORT SUSPENSION CONTINUES

C O N F I D E N T I A L KINSHASA 000346

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/21/2017
TAGS: EMIN ETRD ECON ZA CG
SUBJECT: KATANGA'S ORE EXPORT SUSPENSION CONTINUES

REF: KINSHASA 330

Classified By: EconOff W.Brafman for reasons 1.4 b/d.


1. (SBU) Katanga Governor Moise Katumbi's recent order
suspending the export of unprocessed ore from the province
remains in place (reftel) and has created noticeable impact.
The suspension is pursuant to Katumbi's March 6 communique
stating that the suspension's purpose is to combat the loss
of public revenue due to customs fraud through
under-declaration and other methods.


2. (SBU) Katanga has seven official customs posts - although
not all function. Katanga borders Zambia, Angola and
Tanzania, and a substantial portion of the copper and cobalt
ore from the province currently goes into Zambia for
processing or for onward transport to South Africa. The
crossing into Zambia at Kasumbalesa, about 65 miles from
Lubumbashi, is the busiest post and hence is bearing the
brunt of the export suspension order. Customs officials are
stopping all trucks attempting to enter Zambia with ore, and
they are fining those without proper documentation for their
shipments. According to an inspector at OFIDA, the DRC's
customs agency, Katumbi initially granted some oral waivers
to exporters, creating confusion at customs borders.


3. (SBU) Authorities began releasing some shipments into
Zambia again on March 19, but it is not clear whether any of
the fined transporters are among those cleared for passage.
Rashid Patel, the Coordinator of the Congolese Chamber of
Commerce's (FEC) National Mines Commission told EconOff some
exporters are simply abandoning their trucks at the border
rather than risk paying any fines.


4. (C) The suspension of exports is impacting companies of
all sizes. Managers of both Canadian company First Quantum
and South African company Metorex complained to EconOff that
their shipments have been held up despite their possession of
a waiver to export the ore. (Note: The Mining Code permits
companies who obtain a waiver from the Minister of Mines to
export unprocessed ore. End note.) The Chief Operating
Officer of Australian company Anvil Mining told EconOff that
the provincial government has not suspended its copper and
silver export into Zambia at a customs post on Lake Mweru, in
northeastern Katanga, but that some of its trucks from
Kolwezi, in southern Katanga, are stopped at Kasumbalesa.
Metorex reportedly has more than sixty trucks, containing a
total of 2500 tons of concentrate, waiting to clear customs
in transit to its Zambia processing plant. FEC's Patel
acknowledged that the GDRC is using this suspension to ensure
that First Quantum and other companies with waivers are
complying with the quantity and payment conditions of those
waiver agreements.


5. (C) The GDRC is now backing Katumbi's decision and is
seeking MONUC's support too. Although Vice Minister Kasongo
initially said Katumbi did not have authority to enact the
suspension (reftel),March 19 he claimed Katumbi obtained the
Ministry of Mines' support for the suspension in advance of
enacting it. During their visit to Katanga the Ministers of
Mines and Finance publicly stated they support the
suspension, according to Congolese media. Katangan officials
have even asked MONUC to support the suspension. Slobodan
Didi, the MONUC head of office in Lubumbashi told EconOff
provincial officials have asked MONUC for assistance in
securing the border at Kasumbalesa. Didi said MONUC is
considering providing the support of an Indian border police
unit, whom he said initially came to Katanga to provide
security support during the 2006 elections period.

COMMENT
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6. (SBU) Katumbi has other issues with Zambia due to his
acknowledged ties to the former Zambian president Frederick
Chiluba. He maintains, nonetheless, that his order to
suspend the export of unprocessed ore is to increase state
revenue and end illegal exportation of the DRC's natural
resources. End comment.
MEECE