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Glint of fabulous wealth in 'heart of darkness' beckons
ZILLA EFRAT Looks at a country of dazzling potential
JOSEPH CONRAD's character, Kurtz, found the "heart of darkness" in Zaire. A local trading companies calls Zaire "Cowboy Land", and several SA companies have burnt their fingers trying to do business there. Yet Zaire is being discussed in the boardrooms of mining conglomerates around the world. The spur is Zairean rebel leader Laurent Kabila's territorial advances, which have given him control over areas of great mineral wealth. Even though Zaire's economy has been badly mismanaged, it is potentially one of Africa's richest countries. Zaire's chronic political instability since independence in 1960 has sent many SA companies scurrying for cover. For example, Credit Guarantee Insurance Corporation, which covers trade risk, has done no direct business with Zaire since notching up large losses almost 20 years ago. The only deal Metro Cash & Carry has concluded since its store in Kinshasa, Zaire's capital, was burned and looted in riots in 1991 was the sale of the property a year ago. Its parent company, the Premier Group, which sent in two jets to evacuate its staff from Zaire's copper capital Lubumbashi in 1991, now only trades with some of the city's larger wholesalers. However, Zaire's huge latent potential has lured back some who burnt their fingers in the past. In the 1970s, "political pressures" forced Anglo American to walk away from the copper- and cobalt-rich Tenke Fungurume deposits despite a $268-million investment made by a consortium of which it was part. While it has no personnel on the ground yet, Anglo has found premises for its Zairean office. It has also submitted tenders for two copper and cobalt projects: Kolwezi Tailings and Ruashi-Etoile. State-owned railway company Spoornet suffered heavy losses in 1993 when the railway trucks it leased to Zaire were found stranded and stripped of everything usable. Two years ago, however, it set up a venture to manage and operate Zaire's southern and eastern rail networks. This week Spoornet said its Zairean operations were losing over R500 000 a month because of the civil war. Following an embargo introduced last Friday by Zairean authorities, 37 of Spoornet's wagons loaded with SA commodities are standing idle in Andola, Zambia, 20km from the Zairean border. Another 24 wagons en route are also likely to meet the same fate. SA exporters are feeling the heat too. Trading group Industrial Commodities, for example, says its sulphur exports, worth about $360 000 a month, have been on hold for the past six weeks. It made its last aid shipment of maize to Zaire two months ago. Standard Bank, the only SA bank with a Zairean operation, reports a slowdown in its business there and says contingency plans are in place to evacuate its Kinshasa staff if the situation deteriorates. There are also concerns that a $45-million timber and logging operation in Zaire's north-west Mai-Ndombe region - financed by Standard Corporate and Merchant Bank - could be delayed. However, Engen, the second largest exporter of petroleum products into Zaire, reports no problems, mainly because its products are in such demand. This is possibly because of large military consumption. SA businessmen are not openly cheering Kabila's advance, but judging from their comments they are not opposed to him. With the country's power base still split in half, most businessmen are keeping pretty tight-lipped. Little is known about Kabila, once a Marxist revolutionary who now believes in a market economy. But some businessmen believe any change to the 32-year reign of president Mobutu Sese Seko, who is said to have amassed a private fortune of R24-billion, can only be good. "Things cannot get worse than they were under him," says the head of a local trading company. Zaire's economy has been on the decline since the 1970s. It has a gross domestic product per capita of about $100 a year and an annual inflation rate of 300%. Two years ago the World Bank closed its Kinshasa office, declaring Zaire insolvent. Yet, in addition to having rich agricultural and oil resources, Zaire is Africa's biggest diamond producer in volume terms. Zaire was the continent's fifth-largest mineral producer in 1995 - a time, says BOE NatWest analyst Barry Sergeant, when mineral production had plummeted because of a failure to commercialise its mining industry. Gecamines, Zaire's copper and cobalt mining company which is headquartered in Lubumbashi (taken by rebel forces this week), produced half a million tons 20 years ago, but only 30 000 tons in 1995. Zaire's cobalt production is now 25% of its 1974 peak, copper at 7% of 1980 levels and diamonds at 85% of the 1986 high. Sergeant says: "Zaire is basically a virgin country. It is known to have deposits across the spectrum of minerals. While Shaba province is seen as the key mineral area, the mineral wealth is probably spread across the country. "Western mining companies do not have to worry about exploration in Zaire. They know that its ore bodies have phenomenal potential." Sergeant believes that at the first signs of a political turn-around, these companies will invest in Zaire. Many are already positioning themselves. SA groups like Anglo, Gencor, Iscor, as well as internationals like Barrick Gold, American Mineral Fields, Broken Hill, Australia's BHP and Ashanti Goldfields, are known to be interested. The Financial Times reports that Kabila was courted by a number of mining executives as he flew into Zaire's diamond capital Mbuji-Mayi this week on a plane owned by a private businessman. First to greet him were executives from Miba, Zaire's largest single producer of diamonds. He also met with representatives from both Anglo and De Beers over the weekend. De Beers has buying offices in Kisangani and Mbuji-Mayi, now controlled by rebel forces, and a contract to buy Miba's production. Miba is 80%-held by Zaire's government while Sibeka of Belgium, in which De Beers has a 20% stake, holds the remaining 20%. Like a number of other SA companies with no current investments in Zaire, Gencor says it is watching the situation with great interest. Iscor, which has been involved in Zaire for several years, says it is focusing on the long-term potential of the country and not on its immediate situation. Iscor's agreement with Gecamines, reached in February, gives it rights to complete a feasibility study for the rehabilitation of the Kamato copper/cobalt mine in Shaba province.
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