VZCZCXRO4236
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #1047/01 3351612
ZNR UUUUU ZZH
R 011612Z DEC 09
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 0344
INFO RUCNSAD/SADC COLLECTIVE
RUEHXR/RWANDA COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 KINSHASA 001047 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EMIN CG
SUBJECT:    SADC MINING MINISTERS MEET IN DRC (C-AL9-02272) 
 
REF:        (A) STATE 114484; (B) KINSHASA 399; 
            (C) 2008 KINSHASA 1101 
 
¶1. (SBU) Summary: In response to ref A, Econoff attended the opening 
and closing ceremonies of the South African Development Community 
(SADC) Mining Ministers Meeting on November 12 in Kinshasa.  During 
the meeting, mining ministers discussed greater harmonization of 
mining standards and policies, creation of a trust fund to mitigate 
the effects of the global financial crisis on the mining sector, 
Zimbabwe's participation in the Kimberly Process, and coordination 
of SADC's position on climate change in advance of the Copenhagen 
conference.  The real challenge for those attending the meeting will 
be to implement the decisions they adopted.  End summary. 
 
BACKGROUND 
---------- 
 
¶2.  (U) A meeting of mining experts from member governments of the 
Southern African Development Community (SADC) region took place on 
November 10-11 in Kinshasa, followed by a Mining Ministers Meeting 
on November 12.  Participants included members of the Mining 
Industry Associations of Southern Africa (MIASA), which is an 
association of national mining employer organizations and chambers 
based in SADC member states that serves as a forum for information 
sharing, formulating common policies on issues of mutual interest, 
and acting as the official interface between the mining industry in 
the region and the SADC Committee of Mining Ministers.  Two 
representatives from the Congolese Chamber of Commerce (FEC) also 
attended the meeting.  Representatives from 16 banks were also 
present.  DRC Minister of International and Regional Cooperation 
Raymond Tshibanda represented DRC President Joseph Kabila, who is 
currently the SADC President, at both opening and closing 
ceremonies.  DRC Minister of Mines Martin Kabwelulu chaired the 
Kinshasa meeting.  The level of representation at the Mining 
Ministers Meeting was as follows:  The Ministers of Mines of Malawi 
and Mozambique attended, while South Africa, Swaziland, and Tanzania 
sent senior officials.  A senior official and the Ambassador from 
Angola participated, as well as the Zimbabean Vice Minister of 
Mines.  The following countries' representatives did not show up at 
the Mining Ministers meeting:  Botswana, Lesotho, Namibia, and 
Zambia.  In addition, Mauritius and the Seychelles did not send 
representatives because they do not perform mining activities. 
(Note:  The SADC current leadership has suspended Madagascar from 
its fora for political reasons.  End note.) 
 
¶3.  (U) At the opening ceremony, Kabwelulu noted that at the last 
ministerial meeting which took place three years ago in 
Antananarivo, Madagascar in March 2006, SADC ministers of mines 
discussed mining policies, mining investment rules, the political, 
economic and social environment in mining, fiscal and customs 
regimes, and the administration of mines.  Very few mining ministers 
attended the March 2006 meeting and most countries sent senior 
officials, instead, according to the DRC Vice Minister of Mines 
Victor Kasongo.  (Note:  The SADC news archives website indicated 
that the March 2006 meeting was attended by ministers and senior 
officials from 11 member states:  Angola, Botswana, Lesotho, 
Madagascar, Malawi, Mozambique, South Africa, Swaziland, Tanzania, 
Zambia, and Zimbabwe.  End note.)  In July 2006, a conference of 
SADC Ministers of Finance confirmed a harmonization framework.  The 
SADC ministers of mines with the support of the U.N. Economic 
QSADC ministers of mines with the support of the U.N. Economic 
Commission subsequently proposed a strategic vision in Addis Ababa, 
called the "African Mining Vision."  Kabwelulu explained that the 
"African Mining Vision" aimed at creating transparency in the mining 
sector and promoting the optimal use and equitable distribution of 
mineral resource wealth in order to reduce poverty in Africa.  He 
mentioned that within SADC, the mining sector alone comprises 60 
percent of each country's exports, 10 percent of their GDP and 5 
percent of their employment. 
 
¶4.  (U) The purpose of the November 2009 SADC Mining Ministers 
Meeting was to harmonize mining standards, policies and regulations 
within the SADC region; to mitigate the impact of the global 
financial crisis on the mining sector and to update the SADC 
region's geological maps.  In his opening remarks, Tshibanda 
emphasized that the African mining sector needed to develop a 
rational mineral resource management plan, increase exports and 
develop African capacity to process more minerals at home in order 
to be competitive in the international marketplace. 
 
¶5.  (U) At the closing ceremony, the SADC Executive Director 
announced the decisions which were made at the Mining Ministers 
Meeting, which included:  (1) harmonizing mining standards and 
policies in order to attract investment and avoid problems such as 
double taxation; (2) creating a trust fund to mitigate the impact of 
the global financial crisis on the mining sector; (3) organizing 
 
KINSHASA 00001047  002 OF 003 
 
 
artisanal miners into cooperatives and encouraging them to work in 
the agricultural sector instead; (4) coordinating SADC's position on 
the use of coal so it is compatible with the upcoming Copenhagen 
conference on climate change; (5) supporting Zimbabwe's 
participation in the Kimberly Process for Diamonds; (6) improving 
infrastructure and border control; (7) updating SADC region 
geological maps; (8) increasing the level of information sharing in 
the mining sector; (9) promoting greater equality in mining in 
countries where it was illegal for women to work in the mine; and 
(10) holding the next SADC Mining Ministers Meeting in Malawi in 
November 2010. 
 
 
Harmonization of Mining Standards and Policies 
--------------------------------------------- - 
 
¶6.  (U) Two decisions taken by the Mining Ministers concern the 
greater harmonization of mining standards and policies.  The 
President of FEC's National Judicial Commission Marcel Malengo 
Baeleabe indicated that countries want to attract more investment 
and that uniform mining standards and laws across the region would 
help achieve this objective.  He cited the Organization for the 
Harmonization of Business Law in Africa (OHADA) Treaty as an 
example.  In order to reinforce common standards throughout the SADC 
region, mining ministers pushed for greater information sharing 
among experts, especially regarding best practices.  Malengo warned 
that currently not all mining companies have the same standards, 
regarding working conditions and corruption.  Mining codes must be 
fully applied, according to Malengo.  He believed that failure to 
fully implement the 2002 Mining Code has lead to many 
administrative, tax and legal problems in DRC's mining sector. 
 
¶7.  (U) The ministers urged greater harmonization of mining policies 
and making them more uniform.  For example, at present, each of the 
SADC ministers has a different area of responsibility:  in South 
Africa, the finance minister has more control over the mining sector 
than in the DRC.  Some mining ministers are also in charge of the 
energy sector.  Vice Minister of Mines Victor Kasongo recommended 
that all Ministers of Finance and Mines should meet regularly and 
cooperate with each other more on issues.  He also advocated for the 
establishment of an information clearinghouse to counter the effect 
of high inflation in the region. 
 
¶8.  (U) A second mining policy issue is that of double-taxation. 
FEC's Vice President of Mines Simon Tuma-Waku highlighted the fact 
that different countries have different fiscal regimes.  Even within 
the DRC, the specter of double-taxation has arisen.  Tuma-Waku 
complained that the DRC Tax Authority is currently dysfunctional and 
that often it does not know how much revenues it is collecting for 
different services.  The public finance management system, thus, 
needs to be properly automated.  Malengo explained that many 
provincial governments have created their own tax authority which is 
separate from the central government's tax authority and that they 
have levied separate taxes on mining companies, which are not 
authorized in the 2002 Mining Code.  Nevertheless, FEC observed that 
if the central government fully respected the retrocession rule, in 
which 40 percent of federal taxes are sent back to the provinces, 
this problem of double taxation would be alleviated. 
 
Zimbabwe in the Kimberly Process 
-------------------------------- 
 
¶9.  (SBU) Kasongo told Econoff that during the meeting Zimbabwe 
Q9.  (SBU) Kasongo told Econoff that during the meeting Zimbabwe 
expressed willingness to participate in the Kimberly Process (KP) 
for certifying diamonds, but requested assistance from other SADC 
countries.  He informed Econoff that a monitor will be appointed to 
assist Zimbabwe in certifying diamond exports and that Zimbabwe 
would submit a progress report during the next KP meeting in June 
2010 in Tel Aviv.  He announced that the DRC will be deputy chair of 
the Kimberly Process in 2010. 
 
Financial Support Networks 
-------------------------- 
 
¶10.  (U) The mining sector has been devastated by the global 
financial crisis.  According to FEC Vice President for Mines Simon 
Tuma-Waku, the price of copper was USD 8,000-9,000 per ton before 
the crisis.  The price plummeted below USD 3,000 per ton in March 
2009 and is currently around USD 6,000 per ton.  Post has reported 
that between 200,000 -400,000 people in the Katanga Province alone 
have lost their jobs (reftel B), and at least 40 businesses have 
halted or closed their operations in the Katanga province alone 
(reftel C).  The IMF had revised its earlier GDP growth forecast in 
2009 from double digits to 2.7 percent. 
 
 
KINSHASA 00001047  003 OF 003 
 
 
 
¶11.  (U) In order to buffer against future shocks, the mining 
ministers talked about establishing a "trust fund" to help the 
mining sector.  However, the trust fund is still in the conception 
phase.  Kasongo admitted that no decisions have yet been taken about 
contributions to the fund, how it would be operated or how 
distributions would be made.  He stated that the mining ministers 
also considered the financing of local entrepreneurs in the mining 
sector, but no solutions were found and even South Africa has had 
difficulty with this issue.  Finally, the mining ministers opined 
that artisanal miners should organize themselves into cooperatives 
in order to achieve an optimum level of small-scale mining and 
greater access to credit.  Kasongo believed that artisanal miners 
should furthermore be encouraged to enter agriculture in order to 
take off pressure from the mining sector. 
 
Climate Change 
-------------- 
 
¶12.  (U) Kasongo reported that Mozambique took the lead during the 
Mining Ministers Meeting in discussions on SADC's position on the 
upcoming Copenhagen meeting on the environment.  He said that SADC 
countries agreed that they should be able to use coal for power 
generation.  On the other hand, they want to coordinate the use of 
coal so that it is compatible with climate change considerations. 
he DRC, which has no coking coal, wants to receive carbon credits 
for not burning coal from its rainforest. 
 
¶13.  (U) Note:  The GDRC will release the official report on the 
SADC Mining Ministers Meeting on December 1.  Post will provide a 
copy of the report by e-mail upon request.  End note. 
 
¶14.  (SBU) Comment:  Conclusions reached during the SADC Mining 
Ministers meeting look great on paper, but the real test will be in 
their implementation.  More harmonized and transparent mining 
standards and policies would help boost investor confidence. 
Limiting greenhouse gas emissions from coal-generated power in the 
Congo Basin, the second largest rainforest in the world, would go a 
long way toward achieving goals set out in the upcoming Copenhagen 
environment conference.  Zimbabwe's active engagement in the 
Kimberly Process would be welcome in the effort to prevent conflict 
diamonds from entering global markets.  However, establishment of a 
trust fund and improvement of infrastructure will require more time 
because of financial and logistical constraints.  End comment. 
 
GARVELINK