Tenke Copper Cobalt
- Reference: P-CD-BAA-001
- Approval date: 03/10/2007
- Start date: 02/10/2008
- Appraisal Date: 09/05/2007
- Status: ApprovedAPVD
- Implementing Agency: TENKE FUNGURUME MINING (TFM)
- Location: TENKE FUNGURUME
4.1 PROJECT CONCEPT AND DESCRIPTON
4.1.1 In February 2007, a Bankable Feasibility Study (BFS) was completed by GRD-Minproc Ltd (GRD) and Golder Associates (Golder) which confirmed the technical and economical viability of the project. The project was also reviewed by the Lenders' Independent Engineers, CAM, in May 2007. The project has an expected project life of 41 years (19 years of primary mining and 22 years of secondary mining involving the treatment of stockpiles). Copper and cobalt will be recovered from the Kwatebala, Goma, and Fwaulu ore bodies. The deposits are located within two concessions totaling 1,437 km2 in Katanga Province, 175 km northwest of Lumumbashi. The two mining concessions were granted to the Sponsors in 1996. Annex 2 shows the project location.
4.1.2 The project will produce 115,000 tpa Grade A copper cathode, 8 ,000 tpa high-grade electro-won cobalt, and 2,000 tpa of cobalt as hydroxide intermediate. The project scope includes:
(i) the development of access roads to mine the 3 ore bodies;
(ii) the construction of a processing plant to produce the specified metal quantities;
(iii) upgrading supporting infrastructure (power, roads, water, sewerage, and accommodation) required for the mining and processing operations; and
(iv) a tailing facility capable of storing life-of-mine tailings, residue and water from the plant, mine and waste rock area.
4.2 PROJECT SPONSORS AND CORPORATE STRUCTURE
Corporate Ownership and Project Company
4.2.1 The project company is Tenke Fungurume Mining SARL (TFM), a limited liability joint stock company incorporated by presidential decree under Congolese law in December 1996. Following the execution of a Shareholders' Agreement in September 2005, the TFM shareholders are: Lundin Holdings Ltd (LHL) with 80% direct share ownership and 2.5% indirect participation, and G
5.4 RATIONALE FOR BANK'S INVESTMENT
5.4.1 Additionality: In supporting this project, the AfDB as the premier financial institution for the continent, is able to provide a political-risk comfort to the Sponsors, allowing them to operate safely in a frontier market with an adequate return. This is in accordance with the Bank's mandate. Beyond the provision of the long-term financing, the Bank will raise awareness through the application of the highest social and environmental standards, and will act as full risk-taker for the political risk. The AfDB's knowledge and shareholding as well as its expertise in development finance comfortably position it to absorb this type of risk.
5.4.2 Good Governance: ADB assistance to this project will help to set a good example for good governance in the mining sector, which is the mainstay of the DRC's economy. In addition to the due diligence made by the Lenders on the legal side concerning the mining concession held by TMC, the Government has establishment a committee to review all joint ventures with G
4.11 DEVELOPMENT IMPACTS
4.11.1 The summary table in Annex 13 provides benefit estimates for the life of mine (41 years). All numbers are in real terms, and average figures in the section below are calculated over 41 years. The total direct benefits from the project to DRC government, labor, citizens and businesses amount to an average of USD 102 million p.a., as detailed below.
4.11.2 Direct Labor Benefits: Direct benefits result from the jobs created, income generated, and from the direct expenditures (local purchases of equipment, materials, and contract services) necessary for the performance of all project activities. The project location is an area of the DRC that suffers from severe poverty and large-scale unemployment. It is estimated that 2,500 new jobs will be created during the construction phase and 1,020 during operations. Wages paid to local workers are estimated at USD 13 million p.a. Direct beneficiaries are the local communities neighboring the project site.
4.11.3 Local Supply Chain: The total value of purchase orders and contracts awarded to local businesses is about USD 24 million p.a. During the construction phase, USD 75 million will be spent on capital costs (contracts for local suppliers and contractors). The project will outsource to local companies work, supplies, and services. The main beneficiaries will be construction contractors, mining and manufacturing firms, financial and other service businesses, wholesale and retail trade firms, transportation and communication firms, and other businesses within the Katanga Province.
4.11.4 Government Revenues: The GDRC will receive on average USD 64 million p.a. Contributions will come in several forms:
(i) corporate income taxes of USD 31 million p.a.;
(ii) other mining policy taxes (on consumables, fuel, land) of USD 2 million/year;
(iii) royalties of USD 5 million p.a. (corresponding to 2% of net revenues);
(iv) export and exchange control duties of USD 3 million p.a.;
M'PENG BAYOI Daniel Constant - OPSD2