The Daunting Challenge of Huge Potential
Infrastructure gaps and lack of access to power are obstacles for growth
The DRC faces the most daunting infrastructure challenge on the continent, and government finances require private and public collaboration to rapidly develop it. The government attempted a shortcut to infrastructural development through the Sino Congolaise des Mines agreement with China in 2008, under the leadership of President Joseph Kabila and his ambitious Cinq Chantiers (Five Construction Sites) program. The US$6-billion investment was to finance mining projects and the development of railways, schools, hospitals and dams. Even though it was confidently titled the ‘deal of the century’ when signed, it has not yet led to the beneficial socio-economic results it had promised. Most Congolese consider that the DRC is exchanging part of its mineral wealth for deficient roads and poor equipment.
Resource-for-infrastructure deals are controversial as they often lack transparency and fail to provide guarantees to the host country. The DRC’s persisting infrastructural deficit increases business costs, exacerbates geographical isolation and inequality across provinces, and decreases its attractiveness as a destination for mining investment. "A project such as Manono, located 500 km from Lubumbashi in the south of the DRC, has great potential, but infrastructure in Manono is limited. For example, the cost of moving a truck from DRC to South Africa is approximately US$6,000; the same distance within the DRC would cost US$15,000,” stated George Ioannou, head of Africa at Polytra Group, an international logistics service provider.
"A project such as Manono, located 500 km from Lubumbashi, has great potential. Nonetheless, access to the project area is difficult from Katanga or even Tanzania. Infrastructure is limited. For example, the cost of moving a truck from DRC to South Africa is approximately US$6,000, the same distance within the DRC would cost US$15,000."
George Ioannou, Head of Africa, Polytra
Large gaps exist also in electricity supply; power shortages occur on average 10 days a month and less than 10% of the population has access to electricity. Most mines rely on costly diesel generators. From 2007 to 2014, electricity supply increased by 28% and in 2014, the government promulgated the Electricity Act and created an electricity regulatory agency to promote rural and peri-urban electrification. The challenges to the existing power network can be addressed with adequate commercial financing, however, the DRC’s financial framework is based on small commercial banks, with no stock market or capital market to finance these projects.
“Mining companies will start relying on the national grid when power is subsidised by the Congolese government. Currently, only 10% of the Congolese population have access to power; the government hopes to increase it to 30% by 2025,” clarified Dalila Velado, area general manager of South and Central Africa at Aggreko, a supplier of temporary power generation solutions and temperature control equipment. “Due to certain constraints, mining companies will have to find alternative sources of power.”
“Currently, only 8% of the Congolese population have access to power, the government hopes to increase it to 30% by 2025. Due to certain constraints, mining companies will have to find alternative sources of power.”
Dalila Velado, Area General Manager of South & Central Africa, Aggreko
International development banks, such as the African Development Bank (AfDB), have helped develop projects such as the Lungunfi II hydropower plant. Hydropower is increasingly being considered by DRC’s mines that are projected to require 1,681 MW of electricity by 2025.
“The Inga III dam project is expected to generate 4,800 MW of electricity, 1300 MW of which are set aside to power the mining industry. The project has been delayed to 2024 or 2025, as opposed to 2020 or 2021 as originally planned,” explained Divesh Hassamal, managing director of Dev Solaire, solar power equipment supplier in the DRC.
The AfDB, World Bank and European Investment Bank have all expressed interest in financing this US$80 billion project. However, the communities that will be forcibly displaced must be resettled and adequately compensated to avoid the mistakes of Inga I and II in 1972 and 1982. The project is currently struggling to obtain financing after the World Bank announced suspending funding due to transparency concerns after the presidency took control of the project.
"The challenge to smelting is the shortage of electricity. However, there are new power generating facilities under development, that will facilitate an increase in smelting capacity. An alternative source of power is solar energy, but it is costly relative to the hydropower."
Navin Dalmia, Managing Director and CEO, Rubamin
“The government is also working on the ambitious ‘Kinshasa Solar City’ project in Menkao, 25 km east of Kinshasa. The first phase should be completed in one year. The project will be the first in a 1000 MW series of solar farms around the city, which has a population of 10 million. The electricity generated will feed into the grid. I am not very optimistic about this project, as the area dedicated for it is not sufficient and neither is the backup system,” highlighted Hassamal.
Meanwhile, Mauritius-based Tembo Power Holdings, an Independent Power Producer (IPP), is proposing a new approach to address the electricity shortfall by developing five small hydropower sites linked together to provide 96 MW to power the mines in the DRC. Located in the Lubudi area of the Lualaba province on the Central African Copperbelt, the US$300 million project was delayed as a result of the pandemic and is to start by July 2021.
“Our project portfolio in Lualaba province includes three run of river hydropower projects and one solar PV hybrid to regulate output during the dry season (Dikolongo 17 MW, Kawa 17 MW, Kambudji, 32 MW and Lubudi Solar 30 MW),” commented Raphael Khalifa, founder of Tembo Power Holdings. “Run of river hydropower is an old technology, a reliable energy source and has virtually no (negative) environmental impact. With increased clean energy availability in the Copperbelt, mining companies can significantly reduce the money spent on costly diesel power sources.”
Barrick’s Kibali gold mine invested US$207 million as it built three hydroelectric plants for its underground operation supplying a total of 42 MW in 2012, 2017 and 2018. The 11 MW Azambi project developed in 2018 reduced the mine’s overall energy cost by 75% and allowed it to save fuel-related costs amounting to US$19.2 million per year. “The project is an 11 MW run-of-river hydroelectric scheme located on the Kibali river in the North-Eastern district of the DRC. It produces approximately 64 GWh of renewable, cost-effective and reliable electricity each year to power the remote mine and local community,” explained Vishal Haripersad regional manager of Knight Piesold in Africa, who executed the project for Barrick. “The projects identified in the DRC for hydropower are often mega projects such as dams. However, you can harness the power of rivers to provide a clean source of energy to the mines and provide power to surrounding communities.”
Image courtesy of Jordy MATABARO