winner of research poster contest (discipline 3: sustainable ......note winner of research poster...
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Title Business and Economic History of Copper Industry in the Democratic Republic of Congo
Author(s) Kalenga, John Ngoy
Citation 第3回北海道大学サステナビリティ学生研究ポスターコンテスト = The Third Hokkaido University SustainabilityResearch Poster Contest. 平成23年10月25日(火) - 11月6日(日). 北海道大学学術交流会館, 札幌市.
Issue Date 2011-10-25
Doc URL http://hdl.handle.net/2115/47457
Type conference presentation
Note Winner of Research Poster Contest (Discipline 3: Sustainable Production & Consumption )
File Information C3-12.pdf
Hokkaido University Collection of Scholarly and Academic Papers : HUSCAP
Acknowledgments We thank all professors, managers and contributors for their advice and support to conduct
this study.
Introduction The Democratic Republic of Congo as resource-rich developing country suffers from a
phenomenon termed the resource curse. Paradoxically, wealth in the form of natural resources
appears to be detrimental to the economic development of the country. The mining sector has
constituted the cornerstone of Congolese‟s wealth since colonial times. The country on average
has lower growth rates, lower levels of human development, and more inequality and poverty.
The current scenario of production shows high risk to compromise sustainable development for
future generations. The copper ore reserves of DR Congo are estimated to last for about half a
century. Sustainable management of natural resources is essential to assure the socio-economic
development. Historical analysis of primary and secondary sources identifies bad institutions and
corruption as the main reasons why the country performs badly in economic terms. There is a
risk to maintain people in poverty up to depletion of resources.
Production of Copper The output of Congolese copper industry is depicted in the following graphs. The graph 1
depicts the first phase of output of Union Miniere du Haut Katanga nationalized in 1967 and
renamed as Gecamines. The second phase of output is shown in graph 2.
The production collapsed in the 1990s. The ores reserves are estimated to last about fifty years.
The output is exported to industrial countries as depicted in graphs below.
.
Conclusions The copper industry in DR Congo has high potential capacity to contribute to economic growth. The
interactions of economic, political and managerial factors had negative impacts on the industry for the last
century of exploitation. The data of production, consumption and GDP give evidence that the past and
current scenarios of management are not sustainable. In order change the trends:
The Congolese government should stop the patterns of illicit exports and corruption, as well as
interference of political and military officials in mining deals.
The study suggest new concept of “clean deals” in minerals at every stage as solution to improve the
management of mineral resources in order to achieve sustainable development.
There is hope that copper industry can afford sustainable development with concerted efforts of public
officials and local people by better use of natural resources.
Sustainability Weeks 2011
BUSINESS AND ECONOMIC HISTORY OF COPPER INDUSTRY
IN DR CONGO John Ngoy Kalenga —Graduate School of Economics and Business Administration, Hokkaido University, Sapporo, Japan
Literature cited 1 Primary Sources
Annual Reports of Gecamines 1967-1996
Annual Statistics of Production of Sodimico 2002
Annual Reports of Sodimico 1974-2010
DR Congo Mining Code 2002
Interviews conducted in March 2010 and February 2011 with:
Mr Musafiri, Director of Production Sodimico,
Mr Kalay, Director of Human Resource Sodimico,
Mr. Nyembo, Research Department Director of Gecamines
2 Secondary sources
Fischer, F.M., et al., An econometric model of the world copper industry, The Bell Journal of
Econometrics and Management Science, Vol. 3, No. 2 (Autumn, 1972), pp.574-575
Humphreys, D., Sustainable development: can the mining industry afford it? Journal of Resources
Policy 27 (2001), pp.1-7
Figure 2 Forest and Mineral deposits in DRC
Objectives The purposes of the research are:
1 To assess the contribution of copper industry to economic growth.
2 To explain the turning points of copper industry.
3 To understand the impact of mineral resource mining on environment at local and global
levels.
Study Area This research is conducted on the south-eastern part of Katanga Province, in the Democratic
Republic of Congo. This area long of 300 kilometers contains in excess of 10% of the world„s
known copper resources and about 34% of global cobalt deposits which are exploited by
Gecamines and Sodimico in DR Congo. It is called the Central African Copper belt.
Economic Analysis of copper industry:
- Production oriented to exportation..
- Unexploited demand from local and African markets
- Supply of raw material instead of adding value by further processing of copper
- Price fluctuation changes the shape of demand and supply curves.
- Need of new investment in research, technology and further refining
- Economic wars of resources in region .
Management:
- Efficient management of scarce copper resources should generate income for economic development.
- Lack of expertise of managers
- Historical analysis revealed that past and current scenarios of production and consumption of minerals is not sustainable.
- Local populations are not involved in copper projects and decision-making.
Political factors:
- Bad institutions lead to corruption and plundering of mineral resources.
- Colonial legacy of the country .
- Lack of internal pressures on officials
- Total dependency on foreign investments from multinational companies
- Lack of patriotism to ensure that copper resources benefit to all population.
Materials and methods We use interviews conducted in March 2010 and February 2011with managers of Sodimico and
Gecamines. The Annual Reports of these two companies and Archives are primary sources
collected for this study. We use qualitative method to explain the impact of copper industry on
economic growth and environment protection. The study integrates Interdisciplinary Approach
including History, Economics, Politics, and Business.
Consumption of copper The quantity of metals consumed determines the stage of economic development of the country.
DR Congo consumes less than 10 percent of its output as depicted in graph 5 below.
Analysis and Results The contribution of copper industry to GDP and the evolution of Per capita GDP are depicted in the following
graphs.
Figure 1: Map of Central Africa Copper Belt
Source: ICS Copper Systems
Graph 1 Production of UMHK 1910-1967
Source: Author using data from Mobutu Sese Seko 1965-1975.
0
50000
100000
150000
200000
250000
300000
350000
1910
1912
1914
1916
1918
1920
1922
1924
1926
1928
1930
1932
1934
1936
1938
1940
1942
1944
1946
1948
1950
1952
1954
1956
1958
1960
1962
1964
1966
To
nes
Year
Copper
Cobalt
Graph 3 Congolese Export of copper and cobalt 2005
Source: Author using data from OFIDA Report 2005.
Belgium
3%
China
52%
Finland
31%
Germany
2%
Japan
1%South Africa
0%
South Korea
0%
Sweden
0%
The Netherlands
0% United Kingdom
1%
United States
0%
Zambia
10%
Graph 5 Consumption of copper in DR Congo
Source: Author using data of Annual reports of Gecamines and Ministry of economy.
0
500
1000
1500
2000
2500
3000
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
Qu
an
tity in
Ton
s
Year
National
Consumption
Clean Deals in Minerals
Environment
(Minerals)
Economy
(Growth)Society
(Actors)
Sustainable production
Reduce, Reuse,
Recycle
Reinvest in new
businessOver extraction
Depletion
Clean deals
New policies
Empower locals
Suggestions The study has identified corruption and
bad institutions with dependency on
multinationals in copper industry as
causes of bad performance. In order to
change the trend, new policies that focus
on clean deals should be implemented in
DR Congo. In addition, clean practices
such as fairness, win-win deals,
transparency, in production, consumption
and mining contracts are required. All
actors should emphasize clean deals that
promote environmental protection to
achieve sustainable development.
Graph 6 Industrial consumption of copper
Source: London Metal Exchange 2010.
Industrial
machinery
9%
Construction
28%
Transportation
12%
Electric /
Electronic
42%
General
consumer
9%
Graph 4 Regional Refined copper Production
Source: London Metal Exchange January 2010.
0% 10% 20% 30% 40% 50%
Asia
America
Europe
Africa
Oceania
Asia
America
Europe
Africa
Oceania
Graph 8 GDP growth rate per capita 1974-2000
Source: Author, data from Parliament’s Report of contracts in mining industry March 2006.
-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
1974 1983 1984 1986 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
GDP growth rate per capita
Graph 7 Contribution of copper industry to GDP
Source: Author using data of Annual reports of Gecamines and Ministry of economy.
0
10
20
30
40
50
60
1953
1954
1955
1956
1957
1958
1964
1966
1967
1968
1969
1970
1987
1988
1989
1990
1991
1992
1993
1994
1995
Per
cent
to G
DP
Year
% to GDP
The contribution capacity of copper industry to GDP declined significantly after the collapse of
industry in 1990s. What happened? Figure 3 Ruashi Mining Site
Figure 4 Ruashi Water Tank close Mining Site
Figure 5 Musoshi Mine
Figure 6 Musoshi Mine Site
Figure 7 Export of Copper
Graph 2 Total output of Gecamines 1967-2006
Source: Author using data from Annual Reports of Gecamines 1967-1996 & BCC 2006
0.00
100,000.00
200,000.00
300,000.00
400,000.00
500,000.00
1967
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Ton
s
Year
Cobalt
Copper