Identifier
Created
Classification
Origin
07KINSHASA404
2007-04-05 13:23:00
UNCLASSIFIED
Embassy Kinshasa
Cable title:  

DRC MARCH ECONOMIC REVIEW

Tags:  EMIN ECIN ENRG ELAB CG 
pdf how-to read a cable
VZCZCXRO6052
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #0404/01 0951323
ZNR UUUUU ZZH
R 051323Z APR 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 5921
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEAIIA/CIA WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS SECTION 01 OF 03 KINSHASA 000404 

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EMIN ECIN ENRG ELAB CG
SUBJECT: DRC MARCH ECONOMIC REVIEW

REF: A. KINSHASA 387

B. KINSHASA 313

C. KINSHASA 177

UNCLAS SECTION 01 OF 03 KINSHASA 000404

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EMIN ECIN ENRG ELAB CG
SUBJECT: DRC MARCH ECONOMIC REVIEW

REF: A. KINSHASA 387

B. KINSHASA 313

C. KINSHASA 177


1. (U) Summary.

- The Governor of Katanga banned the export of non-refined
metal ore from the province, although Canadian company First
Quantum says it has resumed exporting its unprocessed ore.

- The Orientale governor has suspended timber exports from
the province.

- Gecamines, the DRC's copper/cobalt mining parastatal, will
try to increase copper and cobalt production over 2006 totals
and will invest in the rehabilitation of processing
facilities.

- The World Bank and French government have announced they
will provide several million USD in development support for
the DRC.

- Rwanda and the DRC are jointly trying to relaunch methane
gas extraction efforts in Lake Kivu, which the two countries
border.

- Employees of the DRC's diamond mining parastatal, MIBA,
claim they are due the equivalent of more than six months of
salary.

- March consumer prices increased, but the Congolese franc's
official exchange rate stabilized against the USD. End
summary.

EXTRACTIVE INDUSTRIES
--------------


2. (U) Katanga Governor Moise Katumbi has declared a
permanent ban on the export of non-refined metal ore from the
province and is enforcing this ban at several customs posts
on the border with Zambia. Exporters of laboratory-certified
concentrate have a six-month grace period during which they
may continue to export the ore. Further, Canadian First
Quantum says it resumed its export of unprocessed ore on
April 3 after posting a security bond with the DRC's customs
agency, OFIDA. Katumbi says customs revenues have increased
by 30 percent as a result of the augmented customs
enforcement (reftel A).


3. (U) Gecamines' (the DRC's copper/cobalt mining parastatal)
2007 production targets are 30,000 MT of copper and 1500 MT
of cobalt, against 2006 production of 24,000 MT of copper and
749 MT of cobalt. Gecamines officials also say the company
will invest USD 60 million in 2007 to rehabilitate copper
concentrate processing facilities and expand production and
exploration.


4. (U) Katanga Mining Company (a Toronto-stock exchange

mining company associated with Belgian George Forrest)
announced that it arranged USD 260 million in project
financing for development of its joint venture in Katanga
province with Gecamines, the DRC's copper/cobalt mining
parastatal.


5. (U) CAMEC, London AIM-listed mining and trading company,
reported it has produced its first copper cathodes at its
refinery in Katanga province. CAMEC and Gecamines are
joint-venture partners.


6. (U) According to Congolese media, Rwandan and Congolese
experts met in Gisenyi, Rwanda from March 26 to 28 to discuss
exploitation of methane gas in Lake Kivu, which forms part of
the border between the two countries. (Note: About
two-thirds of the lake is Congolese territory. End note.) The
parties said they would try to launch activities in
mid-April.


7. (U) DRC authorities arrested the DRC's nuclear research
center director, Professor Fortunat Lumu, on unsubstantiated
charges of trafficking nuclear materials. Lumu was released
several days later, and government officials ultimately said
the arrest and ongoing investigation arose out of Lumu's
alleged unauthorized approval of a deal with a British
company, Brinkley Mining (reftel B).


8. (U) The Orientale governor has suspended timber exports
from the province pending exporters' compliance with the 2002

KINSHASA 00000404 002 OF 003


Forestry Code, particularly regarding social development
obligations to communities in the logging areas.

INFRASTRUCTURE
--------------


9. (U) Many neighborhoods of the city of Kinshasa experienced
a three-day power blackout due to the failure of equipment of
SNEL, the DRC's electricity authority. Much of SNEL's
equipment, including one of the hydroelectric plants that
provides power to Kinshasa, dates from the 1950s.

INVESTMENT AND DEVELOPMENT
--------------


10. (U) The World Bank Board approved USD 180 million in
immediate DRC project funding on March 29 (reftel C).


11. (U) The Katanga provincial government will lend the RVA
(the DRC's airport authority) funds to rehabilitate the
runway at Lubumbashi's international airport. A construction
company associated with George Forrest will do the work. The
airport will close for at least a few days during the
construction.


12. (U) The British Government has pledged to give the
African Development Bank about USD 98 million to support
protection of the Congo Basin forests in ten countries.


13. (U) The French Minister of Cooperation and Development
signed a partnership agreement with the GDRC under which the
French government will provide 235 million Euros in support
to the DRC from 2007 to 2011, primarily in the education,
health and environmental sectors. This is the first such
agreement between the two countries in 17 years.


14. (U) The Congolese Chamber of Commerce (FEC) opened a
business dispute resolution center in Kinshasa.


15. (U) The Kinshasa business community and the GDRC suffered
millions of dollars in losses as a result of the March 22-23
fighting and looting (septel).

LABOR
--------------


16. (U) Employees of MIBA, the DRC's diamond mining
parastatal, claim their salaries are more than six months in
arrears. MIBA's 2006 diamond production and income declined
significantly over 2005 totals.


17. (U) Employees of SNCC, the DRC's railway authority, went
on strike for several days to demand payment of salary
arrears.

FEBRUARY AND MARCH EXCHANGE RATES
--------------


18. (U) In February, the Congolese Franc (FC) depreciated by
five percent on the official market and by five and a half
percent on the parallel market. The Congolese Central Bank's
official exchange rate was 540 FC per USD on February 1 and
565 per USD on February 28. Nationwide, the FC traded on
unofficial markets at an average rate of 545 CF/USD on
February 1, and closed the month trading at an average rate
of 575 FC/USD. The FC has depreciated more than 10 percent
since December 30, 2006.


19. (U) The official exchange rate stabilized in March,
although the street (parallel market) rate continues to
fluctuate more widely.

Week ending 3/9 3/16 3/22 3/31

Central Bank Rates: 564 564 558 555
Parallel Rates
Kinshasa 575 575 565 565
Lubumbashi 560 565 560 560
Mbuji-Mayi 560 565 560 560
Bukavu/Goma 565 565 560 565
Kisangani 560 560 560 560
Matadi/Boma 570 565 560 565

FEBRUARY AND MARCH CONSUMER INFLATION
--------------


20. (U) Currency devaluation was a major cause of the 2.2

KINSHASA 00000404 003 OF 003


percent increase in consumer prices in February, as measured
by Post's market-basket survey. The increased cost of USDs
impacted housing rental rates (which are charged in USD in
Kinshasa) and transport, following a January petroleum price
increase.


21. (U) Post's market-basket survey indicated a 2.3 percent
consumer inflation rate in March, bringing year-to-date
inflation to 8 percent. Increases in the price of beverages,
firewood, charcoal, and domestic utility service contributed
to this jump in March.
MEECE