DR Congo: Joblessness rises as global crisis hits mining

The global economic crisis has hit the central African state hard. Especially the Katanga in the south eastern part of the sprawling country, a region that predominantly relies on the mining of copper and cobalt, has taken a big blow.

Since September 2008, the global demand for natural resources dropped and prices of commodities like copper and cobalt plummeted to all-time lows.

While copper lost over 50% of its value, cobalt - a mineral that is predominantly used to make rechargeable batteries and alloys - fell from a peak price of 52 dollars a pound in March 2008 to approximately 18 dollars nine months later.

As a result, over half of the 75 copper and cobalt mining companies operating in the Katanga province were forced to either fully suspend or slow down their production activities.

Subsequently 300,000 people lost their jobs and 60,000 more mine workers face retrenchment in the months to come, as there is no sign that copper and cobalt prices will recover any time soon.

One of the enterprises that suspended its production and processing activities in the Katanga is Anvil Mining. In December 2008, the Australian company, which is one of the leading copper producers in the DRC, announced that it would close its 90%-owned Dikulushi mine until further notice. Most of the 1,056 permanent and contract workers at the mine have been retrenched.

Anvil Mining says that this decision will save the company around two million dollars per month.

"The Dikulushi mine is uneconomical at present," explains Bill Turner, president and CEO of Anvil Mining, in a statement. "This decision has not been an easy one to make and is regrettable to our employees, communities that surround the mine and our stakeholders but we believe that it is the best option to preserve our cash resources until market conditions improve."

Anvil also halted a new development project at its Kanseveré site, which saw 550 jobs being shed. "Of course it is a sad situation," comments Charles Konya, the administrator of Anvil's office in Lubumbashi, the provincial capital of the Katanga.

"But the mining industry has to do something," he continues. "Since September last year, the global demand for copper and cobalt has plummeted. To survive, some companies have closed down completely until further notice. Others have postponed development projects. We hope that the copper price will recover and it will. The question is when this is going to happen."

Meanwhile, the Congolese franc has lost almost half of its value. "Between October 2008 and early January 2009, the exchange rate dropped from 500 to almost 800 Francs for a dollar," according to Marijke Splinter, a Dutch expatriate who resides in Lubumbashi.

"This has a tremendous impact on people's lives, as many Congolese do not earn more than 100 dollars a month," she adds. "Food prices, charcoal and cooking oil have increased in price too. I also see more and more beggars and children on the streets, compared to a few months ago."

Eric Meert, who runs Bakanja Ville - a facility in Lubumbashi for street children - confirms Splinter's observations.

"Up until recently, we knew every child that lived on the streets," Meert explains. "Over the past weeks, however, we have seen quite a few new faces. This is definitely linked to the economic situation and the retrenchments in the mining industry."

"Before the crisis, families were already struggling to take care of their children but the current developments have worsened the situation," Meert states. "As a result, youngsters are sent onto the streets, either to work and to support their parents, or permanently."

Meanwhile, MONUC, the UN Mission in the DRC, is keeping a close eye on security situation in the province. "The economic crisis is so alarming that we are assessing the social and security-related problems which could result from the situation," according to a MONUC press statement.

The authorities and reports in the local media indicate that violent crime in the city is on the increase. During the last week of December 2008, 11 people were killed in Lubumbashi, including a Chinese and a Lebanese. Two were killed in the town of Likasi.

"This development seems to spring from the crisis hitting the Katanga," Lubumbashi's mayor Marie-Gregoire Tambila argues. "At least, this is what we assume, as the attacks follow the influx of miners to Lubumbashi after the closure of various mining companies in Katanga."

The mining crisis is slowly but surely trickling down to other businesses in the Katanga. "It is much quieter than a couple of months ago as many people have lost their jobs and income," complains a woman who only gave her name as Sabine. She runs a small takeaway restaurant in Lubumbashi. "It seems that those who still have work are more careful with what they have, which is understandable. These are difficult times."

Article published courtesy of IPS Africa