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 
 
¶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