KINSHASA – Expected cost-cutting by mining companies in Democratic Republic of Congo is likely to lead to layoffs and reduce government revenues amid a sharp decline in metals prices, the chamber of mines said.
Falling prices would not affect copper output this year, the chamber said in a report seen by Reuters on Thursday, though it estimated that production would slip slightly due to electricity shortfalls.
In contrast, the chamber forecast that gold production would increase 33.5 percent in 2015. Output of the precious metal soared by 79 percent in the second quarter due to large new mines operated by Randgold Resources and Banro Corporation.
Congo is Africa’s leading copper producer, with output exceeding 1 million tonnes in 2014 for the first time ever. The mining sector, which also produces significant quantities of gold, cobalt and tin, accounts for some 20 percent of gross domestic product (GDP).
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“Most mining companies have already announced their intention to reduce costs by selling assets and reducing work forces to improve the efficiency of production,” said the quarterly report.
“This is likely to result in the loss of direct and indirect jobs from the suppliers and sub-contractors. In addition, the fiscal receipts of the state will inevitably fall,” it added.
The report did not refer to a specific time frame. Neither did it say how many jobs were likely to be lost or detail the anticipated impact on government mining income.
Mining operations worldwide have been rocked by sharp declines in metal prices linked to fears of a slowing economy in China, the world’s top industrial metals consumer.
World copper prices hit six-year lows this week. The metal is down more than 18 percent this year, though benchmark LME copper closed up 4.2 percent on Thursday at $5,140 a tonne in the biggest one-day percentage gain since May 2013.
Congo’s government on Monday trimmed its growth forecast for 2015 from 9.2 to 8.4 percent due to slackening demand from China, Congo’s largest trading partner.
The mines minister could not be reached for comment. His chief of staff acknowledged concerns about falling commodity prices and industry cuts but said he was not able to comment on specifics. (Reuters)
