Transcript | Paul Mabolia

3T, tin, tantalum, tungsten, Cadastre Minier, geology

The Right Advice

3T, tin, tantalum, tungsten, Cadastre Minier, geology

00:00 / 00:30:08

Transcript | Arthur Katalayi & Paul Mabolia

Arthur Katalayi (Host): Hello, Arthur Katalayi, Senior Partner at A2k Advisory and founder of the “Right Advice” podcast. Today, we will be joined by Mr. Paul Mabolia, who is the head of the Mining Cadastre of Congo.

Hello Mr. Mabolia, the Mining Cadastre is the gateway to the mining sector in the DRC. Could you tell us a bit more about that?

Paul Mabolia (Guest): Hello, indeed, if you want to enter the mining sector in the DRC in a formal way, you need to have certain basic documents, and the first documents are issued by the Mining Cadastre, where we grant mining rights titles for quarries and for any activity related to mining, whether industrial or artisanal, in the Democratic Republic of Congo.

Arthur Katalayi: What does it take to get access to a license? Because from the outside, there’s always the impression that a license can be obtained through Congolese state companies or the Mining Cadastre. And sometimes, there’s a bit of confusion regarding that. Could you clarify this, particularly for people outside the DRC who would like to access licenses of all types for the minerals that the DRC possesses?

Paul Mabolia : Well, I would say that it’s very simple. It’s not very complicated. The basic document we all have is the mining code and regulations. It’s available in both French and English. It’s online, easily accessible through Google, and you can find all the information on how to obtain mining rights and concessions in the Democratic Republic of Congo. It’s extremely simple. As for us, the mining cadastre, we are also online. You can check our website at https://cami.cd, and you’ll find all the information there.

In addition to that, we not only have information online, but the cadastral file is also available online. So, anyone can go to cami.cd and see the maps and all the concessions that have been granted. You can see the status of all the individuals who have been issued permits.

So, it’s all online, and that serves as a starting point. Now, there’s also the geology section. How can we advance information, and we can also look at other websites from the ministry’s services, such as the National Geological Service of Congo or the Technical Cell for Mining Planning (CCPM).

They also have information online. So, from anywhere in the world, I believe it’s quite easy to find starting information in the mining sector, and this applies to the entire territory of the DRC.

Arthur Katalayi : And this is also available to any investor or economic operator who would be interested in acquiring a license.

Paul Mabolia : Yes, absolutely. Whether foreign or Congolese, we make no distinction. The code is clear. You need to establish a company that must be registered here in the DRC. A subsidiary in the United States is also possible. You need to go through a licensed proxy firm, because if you’re abroad, it’s difficult to contact you when you’re in Honolulu.

You need someone with an address here or represented here in the Democratic Republic of Congo. They can file the application, but you must go through the one-stop shop, be registered, have a bank account in the DRC, and have a physical address. All this information is necessary to be able to acquire a mining concession.

Arthur Katalayi : So, in fact, you can have foreign capital, but the company must be under Congolese jurisdiction.

Paul Mabolia : It can be foreign, but at some point, it will need to be under Congolese jurisdiction for the acquisition of a license.

You can be foreign, but when you start carrying out all sorts of operations, you will need to be on-site, and there must be a branch registered in the Democratic Republic of Congo that pays its taxes… and all of that requires registration locally.

Arthur Katalayi : Very clear. It was recently made public information that there were over 3,000 mining titles that were not in compliance. What does this mean in relation to their surface rights? Was it because they hadn’t been honored, or were there other rules that weren’t followed?

Paul Mabolia : No, the information is not correct. We have issued 3,000 titles. Among these 3,000 titles, about a third, roughly 1,000, had issues for various reasons. Again, the reasons can be found within the mining code and regulations.

If you don’t pay your surface rights, you will be stripped of your title. So, by March 31, we issue debit notes, and if you don’t pay within a month, you will face forfeiture. You are required, for example, when you have a research permit, to begin work within a year. If you don’t start the work within a year, you risk forfeiture. So, there are all these provisions in the mining regulations that weren’t followed, and we reminded all stakeholders that they need to comply with the mining code and regulations.

As a result, we had to submit over 250 problematic cases to the Minister of Mines for non-payment, which were subject to forfeiture. But there’s a whole procedure because when a person receives this notice, they can justify why they didn’t pay. Otherwise, there are cases of force majeure. We noticed that some force majeure cases weren’t truly major, because a force majeure means you cannot access your mine.

Paul Mabolia : You cannot enjoy your site, but in these cases, we see that it may be a maneuver to avoid paying. These are all cases that have been identified as part of the cleanup of the cadastral records that I have carried out since I took over the Mining Cadastre.

Arthur Katalayi : And that’s very interesting because you mentioned research permits. How can one move from a research permit to an exploitation permit?

Paul Mabolia : When you have a research permit, you must conduct research. This means employing geologists, conducting airborne geophysics, fieldwork, and everything related to research, including drilling, etc.

Then, once you have good information, you have five years. Within five years, you must present us with a feasibility study to move from a research permit to an exploitation permit. If, by that time, you haven’t managed to do so, you can request an extension, but at that point, you lose 50% of the territory you’re working on. At that point, we issue the permit, and you continue working. But you must conduct a feasibility study to transition from a research permit to an exploitation permit.

Arthur Katalayi : Very well, and also in relation to something connected to this, what is the strategy for supporting artisanal miners with ZA licenses in artisanal zones? Is there one?

Paul Mabolia : Artisanal mining zones are areas requested by provincial governors, local people, through the Minister of Mines. They send a note to the Minister of Mines for reasons of national interest, such as a concentration of young people with little else to do who can only survive through this type of mining, and an artisanal mining zone is created. Now, the Congolese state, concerned about this, has created what is called the Assistance and Supervision Service for Small Mines (CMAP). It is their job to guide all artisanal miners through cooperatives so that they can work in artisanal mining zones.

Today, we are going to increase this intensity because the problem is growing with the number of artisanal miners and the decreasing availability of space for them to carry out their activities, which is practically a survival activity.

Arthur Katalayi : And in relation to what we were initially discussing about accessing licenses, what is the best way to proceed? Should you go through the Cadastre or a state-owned company? If you go through a state-owned company, can you no longer go through the Cadastre? Can both be done simultaneously?

Paul Mabolia : There is no problem. There are several ways to enter. First, the easiest way is, once again, to look at a site, gather information you have obtained from Belgium or universities, and check if the site is available. You can do this from Brussels, where you are, simply by going to the Mining Cadastre website. You can access geological information and check if the area you want to claim is available. Then, you submit an application for the open space, and that’s where you start.

Now, there are people already involved, and you’ll always see them in the cadastral records. Some permits are expiring… You can directly contact these people because the company name is there. Then, you can see how you can form a partnership. You say, “I’ll team up with you, I’ll cover the documentation costs, and we’ll see how we can work together.”

Since the colonial era, we have had several large state-owned mining companies here. There are six of them that hold substantial areas. You can contact these state-owned companies and see if you can form a partnership—joint ventures. This is what you see today with large companies like TFM, SICOMINES, ERG, etc. These are all companies that have partnered with state-owned enterprises. So, there are several possible solutions.

Arthur Katalayi : So, there is no overlap between a Cadastre license and a license that belongs to a state-owned company? They’re distinct, right?

Paul Mabolia : No, they are not. Everything is registered here. The Mining Cadastre is the only authority to issue mining licenses in the Democratic Republic of Congo. But obviously, they [state companies] also have their own small geology offices, where they have everything, but everything is recorded with us. So, the permits that China is working on are actually permits that are registered with us. There are no mining rights that belong directly to MIBA. Yes, but these are permits issued by us.

Arthur Katalayi : So who is the authority over the permits? Is it the Cadastre?

Paul Mabolia : Who owns the land and the subsoil? It’s the state, according to the Bakajika law. But we grant a 25-year concession to a company, and Gécamines also has many permits it operates on, for which they pay surface rights to the Mining Cadastre, allowing them to enjoy these titles.

Arthur Katalayi : So, a company must first go through the Cadastre and then work with a state company, or can this happen concurrently?

Paul Mabolia : If you want to work with Gécamines because they have interesting permits, you go through them, make a joint venture, do whatever you can. Then, if there’s a transfer, you come to the Mining Cadastre so we can ratify it and archive it.

Arthur Katalayi : There was a study conducted by Bloomberg New Energy Finance in 2022, which stated that the demand for Congolese minerals, particularly copper, cobalt, and lithium, is set to quadruple between now and 2050. What are your thoughts on this?

Paul Mabolia : The study you’re referring to—I can’t recall the exact year—but they came here to present it, and we held a big forum on the topic at the Palais du Peuple. As a result, we established several authorities, including the Congolese Battery Council, to address these issues and to capitalize on the energy transition using the precious minerals we have. The idea was that these precursors should be produced here in the Democratic Republic of Congo or, at the very least, the finished products should be made here as much as possible. We’re working on leveraging this comparative advantage that the DRC has over other countries. The reasoning was: if we do it in Congo, the raw materials and the labor force are already here. There have been memoranda of understanding between the DRC and Zambia, as well as with the Americans under the Mineral Partnership framework, and we are working on all of this.

Arthur Katalayi : It’s worth noting that these minerals are widely used in the automotive technology industry, artificial intelligence, and everything that follows. Should there be more direct collaboration between the DRC and these large international companies, rather than always having intermediaries and not being in direct contact with the companies that use these minerals for their technology and operations?

Paul Mabolia : We always say that it’s easier to have a direct market rather than a triangular one. The product is extracted here, then it goes to China, and from China, it’s sent to the U.S. We’ve said this many times: “Empower the Congolese.” If you don’t want to come here, you can finance us, and we are capable of doing it. Many of us have studied in Europe, so we understand the technology. We may not always have the financing, but we can do it. So today, you can come and build factories here. It’s not that complicated.

People might talk about energy problems, but if you look at the Chinese, they’re able to build dams. A significant but not massive funding, like a Marshall Plan, would be sufficient given the urgency and could benefit everyone. So, I believe that if the Western world really mobilizes and decides to provide funds to the DRC, we can move forward. Don’t blame corruption… Others have done it, and it works, so we can do it too. But we shouldn’t keep using excuses, saying it’s war… In our opinion, that’s just a way to say that it’s also convenient for you because it ultimately costs you less than making long-term investments in artisanal mining. You take minerals from across the border in Rwanda and say, “it’s clean,” but in reality, it comes from us. It’s this kind of pretense that we think fuels the war situation and everything else.

We can move quickly with funding in the DRC. You have people with PhDs from Harvard… the CEO of Regideso is from Harvard, others are from MIT… we have the technology, the capacity to do everything, and we’ve proven it with the KIBALI company, which financed a project in a war zone and managed to build a dam to produce electricity, using Congolese workers.

Today, that company is at the forefront of Green Energy because they’re producing something that’s clean and non-polluting. So, it’s possible. It’s simply bad press and bad faith, in my opinion. People who don’t really want to help find it easier to say that things aren’t working, but they don’t actually want to fix it.

Arthur Katalayi : We have concrete examples…

Paul Mabolia : Exactly. I’ve given you three or four examples of companies that are working very well. We can do it. The model of producing sulfate here or preventing all our hydroxides from going to China is very feasible. We need financing, and we are actively seeking it. Today, when we look for financing, the easiest option is China. If Europeans were to provide 300 or 400 million dollars, we could move forward quickly.

Arthur Katalayi : Speaking of that, there’s more money on the international markets than they can absorb. This means there’s an excess of capital and liquidity on the markets, particularly in the United States. But there’s still this fear, justified or not, among American investors about coming to the DRC due to opacity and risk aversion. What would you say to them?

Paul Mabolia : Regarding the concept of risk—“risk here, risk there…” If you look at the European companies that have been here for a long time and are working here, check out the profits they’re making. It’s not small; it’s substantial. When people ask where the risk is, I don’t really know what they’re talking about. I’ve never heard of a company being nationalized here in the DRC. The companies here, like Kibali, make huge profits, and the Chinese company Simoc just made over 600% in profit… So, people are making money in Congo.

When we talk about risk, I don’t quite understand what’s meant. War? It’s in the east, and it doesn’t really affect these economic entities. No one is crazy enough to damage them, or there would be no money. So, in a way, everything is protected, and it all works well.

So, for me, the concept of risk is outdated. Nowadays, I don’t think it’s relevant because everyone who invests here is making returns.

Arthur Katalayi : And for Congolese in the diaspora or here at home, who sometimes feel like only foreigners can acquire licenses… What would you say to make sure they’re not left out of these discussions? We often talk about foreign investors, but the first investors should be Congolese, both locally and from the diaspora. Are things made easier for them to access these kinds of opportunities?

Paul Mabolia : We all need to be in agreement. It’s our responsibility, and the mining sector needs to be understood. We are part of a system, not outside of it. So, you need to understand how the entire system’s architecture works. Today, if you want to invest, you need funds.

Look at the banks in Congo. If you see a development bank or something similar, there’s already a problem. The Congolese want access to money. So, we need to reform our financial system. We don’t have a stock exchange here in the DRC, though other countries do. So, we’re still operating in an archaic system, in my opinion, and it needs to be modernized.

It’s starting, but it’s not there yet. As long as we don’t have this modernized system, many state-owned companies will remain stuck in the poor management they currently have. If you had a stock exchange, to be listed, you’d have to meet so many standards that I believe a quarter of these companies wouldn’t qualify. That’s already one issue. It would also make it easier for Congolese and others to buy shares. Until we have that, things won’t function well. Now, you have to rely on private capital, which requires a lot of money to invest directly in an activity, and that’s complicated.

There’s also the issue of energy infrastructure and transport infrastructure. I want to invest here, but for example, in Yakoma where I’m from, there are no planes going there. Flights come maybe once a week, so investing is difficult. There’s no transport. Yet there’s a gold mine there. But even with a gold mine, it’s really challenging.

You have to look at everything holistically. It’s not a problem unique to the mining sector or that we don’t want to invest. Sometimes, infrastructure poses challenges, especially when you go far. That’s why people stay focused on what’s been happening for 100 years with Gécamines, because the infrastructure is already in place there. But in areas where new discoveries should be made, unfortunately, no one is willing to wait 15 years to see a return on investment.

Arthur Katalayi : One last question: you started in the mining sector and have been in it for more than 30 years…

Paul Mabolia : Absolutely, since I finished university in Canada.

Arthur Katalayi : Why did you choose this sector, and what recommendations do you have for young Congolese who want to enter this sector, which isn’t easily accessible for the average person from the outside? Do you have any recommendations or advice?

Paul Mabolia : You mentioned that you’ve interviewed others in the sector… It’s a mix of fate and luck… I initially started in the banking sector. I have a degree and a master’s in economics and was aiming to work in banking.

I started working a bit in Stuttgart at Deutsche Bank. Then I came to Kinshasa and started at what was called BCDC (Banque Commerciale du Congo), but I wasn’t that interested. One day, I overheard a friend of my father’s saying he needed young Congolese to go to London to learn about stock trading, specifically how copper prices are determined, since we rely on copper here and there were a lot of issues. My father said, “…but my son is here…”. Then they called me and said, “…you’re going to London to learn…”. That’s how I got into the mining sector, starting directly with trading in London. I learned to buy minerals on futures contracts and sell them.

Since I entered through Gécamines, I’m a product of Gécamines, where I made my career before being called to the Minister’s office in 2003. Since then, I’ve evolved in the ministry.

Arthur Katalayi : You mention luck, but luck is also something that can be created.

Paul Mabolia : Yes, but you can also be in a presentation where people think you’re good. I’ve hired engineers at the mining cadastre based on how I saw them present themselves… When you go to Katanga, you’ll see that many young compatriots are engineers… because their parents worked at Gécamines… They’re fascinated by it…

In Katanga, there is a high concentration of engineers, doctors, and specialists… which you don’t see in Équateur. So, it also depends on the environment in which you grow up. In the mining sector, as I’ve said, you have to take an interest in it, pursue the right studies, and then you’ll have opportunities. If you’re determined, you can also follow the path of many Congolese who start small and build up. In Bunia, many start with gold mining. They begin with two or three sites, buy excavators, and it works.

In the mining sector, don’t just look at Kinshasa. In Kinshasa, we are mainly administrators. But if you go into the interior, you’ll see many young people fully involved, often supported by older, experienced people who’ve been there longer.

Now, the challenge is how to mobilize enough funds to conduct activities because exploration alone costs no less than $100 to $200 million. You also need corporations that are internationally recognized when doing evaluations. One issue with Congolese geologists is that they’ve only just formed their association. Now, they need to gain international accreditation so that their research and signed documents are validated. Currently, Westerners dominate the system for obtaining funds.

So, anything a Congolese person does at the moment won’t be accepted unless it’s done by Westerners who dominate this sector. Or we could create a mining fund for future generations and figure out how to advance things.

Arthur Katalayi : So, you’re saying that access to capital is crucial to undertake medium or large-scale activities in the Congolese mining sector?

Paul Mabolia : Oh yes, that’s clear. Even just for digging, you need shovels, you need a machine, you need boots, wheelbarrows… It’s a bit of money. And when you want to transport them 50 meters, for example, you need trucks… So you need money to start doing it.

It’s not enough and it’s not obvious. You need at least a 30-ton truck to move ores; it costs a lot of money, and the current banking system is not really suited for that. We had a lot of problems with artisanal mining.

I always said, if you take Kasaï, you’ll see in our diamond mining statistics, it’s worth about 345 million dollars minimum. But when you go there to find the company doing it, you can’t find it. So where do these 345 million come from? It’s the activity of artisanal miners. But if they produce 345 million dollars, how is it that bankers can’t give them credits? Why doesn’t it work? How do they manage? All that money is circulating but is not yet channeled into the official system because the banking system is not adapted to artisanal mining. People who are illiterate, who have little education but are very skilled in their field, when they go to the bank for a loan, they are told they need a credit history for the past three years.

So they use African-style systems like “Tontine,” where people come together and manage to carry out this activity. Banks should think about this problem. There are still two or three banks starting to take an interest in artisanal mining. They are workers, and there are ways to find formulas to make money available to them.

Arthur Katalayi : Last question, the show is called “The Right Advice,” what final advice can you give to a company, an economic operator, or a foreign investor to gain access to the Congolese mining sector?

Paul Mabolia : We are in an era of energy transition today, meaning everyone is now looking for very critical minerals that will help lead the economies of countries like China… So we are a “solution” country, as they say, we are a country at the heart, so it might be worth looking into.

Now, these minerals are underground, not on the surface. And how do you get access to them? You take a mining concession and conduct exploration. So you need to have faith, as we say in our country. If you are abroad, come together, seek out all the information, like artificial intelligence today, being in Europe, you can already perform analyses to get a certainty of where the mineral is located. And then you come here, and you do it, and you will succeed because this mineral becomes a critical, important mineral. So it’s open, and see how you organize to do it.

Arthur Katalayi : But a long-term strategy is needed, not a short-term one…

Paul Mabolia : It’s clear, it’s clear. In the short term, I don’t think so. Big companies like Kibali or others… almost all the big companies here have been around for at least 10 years, even Friedland that you’re interested in, started in the early 2000s, but now it’s producing.

And others, all went to Gécamines because it already had operations… like that. They said, “we modernize, we organize and then move forward…” That’s it. Now, this space is starting to get restricted, but there are others for which it is still interesting to do. With Congolese as well, it’s cheaper and can be done faster.

Arthur Katalayi : Very well. In any case, I thank Mr. Mabolia for hosting me here and wish you a good day full of positive things for your future projects.

Paul Mabolia : Likewise to you.

Arthur Katalayi (Host): Hello, I’m Arthur Katalayi, A2k Advisory partner. We are today with Mr. Charles Mesnil, General Manager of Lugamines, a mining company based in Katanga, Hello Mr. Mesnil.

Charles Mesnil (Guest): Hello Arthur and hello to all your subscribers.

Arthur Katalayi: Thank you for having us, today we are going to talk about your very interesting career which started in finance, and we are going to start with your academic background. You graduated from Saint-Cyr of Paris-Dauphine, you are French and you have been in the DRC for almost 10 years now, is that right?

Charles Mesnil: That’s exact indeed. So, quickly on my CV, I have a fairly standard academic background for anyone who wants to work in finance in Europe. So actually Paris-Dauphine is a good address for market finance, corporate finance and it is in this direction that I turned, and indeed, I also doubled that with a stint in the Military Academy at Saint-Cyr, because I think that at the time, it was very formative and I have never regretted that decision. And then there you go. Following that, I started my career in finance first as a junior in corporate finance at Ernst & Young, then in private equity; I was more precisely in ViewPoint Capital, in the software industry, in Frankfurt.

In the meantime I still had an experience which is not so common as that since I crossed Africa, already at the time in my youth, from north to south, in order to discover all the countries which constitute this beautiful continent. And so like that, it gave me a first experience, a first approach and a certain passion for the continent, quite simply.

I come back very quickly to my time in private equity. Indeed we did some transactions at the time in the software industry and then afterwards I did the classic LBO; for your subscribers who know American finance will know what I’m referring to leverage buy out etc. So that’s the financial arrangements in private equity in order to make debt-based company buyouts.

Arthur Katalayi: After the next question I wanted to ask you was why this immediate shift from Europe and private equity, finance to the mining sector immediately; was it a passion you had before? An industry you wanted to get into? Or it is a combination of several things.

Charles Mesnil: So very modestly, I’m still going to have to tell you that there is a certain pattern in finance, for a bit of history, everyone remembers that about thirty years ago when I started my career since I am 51 today; which does not make us any younger. So back then it was all about service.

Arthur Katalayi: Okay

Charles Mesnil: It was the American model, apart from account services. Things have changed and over the past few years as we often find out ourselves, the whole world economy is paying attention to the primary sector – it concerns agriculture, in parentheses. People who know a little bit, know that in Ukraine 40% of the arable land is owned by Cargill, Monsanto and Dupont; major American players. Bill Gates also entered the primary sector. They are more into agriculture and mining of course is becoming very crucial, it was before and we can see it now. So, indeed, we have a tendency in uncertain times that we are experiencing to go back a little bit to the basics and mining is one of them, and mining in the Congo is probably a very good place; one of the very good spots in the world to start at.

Arthur Katalayi: And the mining sector in the south-east of the DRC is both complex but at the same time offers, as you know, a lot of very interesting opportunities now and in the future. What role does a medium-sized company like Lugamines play in this development? And what is your company’s specific service offering?

Charles Mesnil: So that is indeed a good question. I think it is necessary to articulate the answer in 2 parts. First thing is to state very quickly the advantage of Katanga; the whole of the south-east of the DRC compared to the Grand-East, is that most of the large international mining companies are much more willing to set up shop; in priority in Katanga and we can then develop it towards the whole North-Eastern zone. And it has practically nothing to do with the wealth of resources since Congo, as everyone knows, is a land blessed by the gods which has rich minerals in almost all areas.

Correct me if I’m wrong, aside from Barrick, which has its Kibali mine, there aren’t many mines from international operators that have operations in the Northeast. If we can come back a little bit very quickly, it’s of course the security situation, the lines of communication, the foreign interference … Everyone knows about it. So Katanga is an area that, on the contrary, can accommodate a certain number of investments that are bankable to international standards. So we at Lugamines, to answer your question, more specifically, we want to be a primary investor, that is to say that we realized that, since I started my activity in Congo 10 years ago, that between the artisanal mining that continues in many areas and the huge mining operations of KCC, Mutanda and others… Finally there are very few operators.

So we are at a bit of a crossroads where we do exports where we don’t take care of exploration as such, but we identify areas, either with an exploration that was done by others, or ourselves. And then, we are able to plan the entire value chain; that few people do. That is to say that there are people who are only interested in resources, and other people are only interested in taking commissions etc. We are able to plan the entire value chain up to the export plan. And it allows us to sell investment opportunities on terms that are acceptable to foreign investors.

In particular, we were pioneers on embankments. Quite simply the embankments it is when for example Gécamines exploited quarries itself; it proceeded to the constitution of embankments of several hundred million tons which was deemed poor. But in fact, current technology makes it possible to treat the metals that are contained in these fills; so it was a way to promote pretty much all of the metals that were available. Now it’s a bit over since the embankments have been largely exploited and therefore a little more difficult. We, in conclusion of the question, are rather at the crossroads of large investments. That is to say that once we have validated the value chain, then we can make investment proposals so as to develop in collaboration with large international mining operators. What interests us is the long-term vision, not very interested in doing one of the projects as some do … Dan Gertler for example, without trying to judge whether or not this approach is appropriate…

Arthur Katalayi: Also, according to the London firm specializing in mining intelligence, CRU group, the global copper industry must invest more than $100 billion over the next 10 years to fill the annual deficit of 4, 7 million tons of copper. In view of global demand and the energy transition, the demand for cobalt is also just as strong. Afterwards, it must be said that these are the opportunities that will necessarily increase tenfold over the next few years, since demand will quadruple, according to certain estimates. What is needed as a condition for Lugamines and other players in the sector to continue to explore, secure and start other large-scale projects, mining projects in the DRC?

Charles Mesnil: The prerequisite that you made is a perfectly fair presentation, that is to say that there is a transition that is in the process of being put in place. And so, just to follow up on this preliminarily quickly, there is indeed a copper boom and it’s very interesting to see that when certain commodities have collapsed before recovering, and in particular in recent periods… Finally, copper remained at a very good level despite the drop in activity in China in connection with Covid19. It’s held up and it’s very interesting to see. Speaking of copper, it is the main resource. There’s also cobalt that’s used, people probably don’t know that, it’s basically used to stabilize batteries. That is to say to avoid the phenomena that everyone knows about spontaneous combustion, battery explosion etc.

But of course there is lithium; it is I would say the new frontier, as far as mining in the DRC is concerned. Chile has to be the second of the world’s reserves after Australia, it seems to me anyway. Australia is by far the world’s number one producer of lithium. The Manono area in Congo, north of Katanga, is an area that is on the way to becoming the new California from this point of view, so of course we have to build roads and so on. But there are huge potentials. So that’s a preliminary remark. To add a little word, you should never base a business plan on the last observed commodity prices because you have enormous volatility. Earlier you mentioned cobalt, I saw cobalt at $90,000 per ton, it has stabilized more or less at $35,000, but there are operators who have made their business plan based on that, we can mention Schemaf; it seems to me that it is not a big secret. This of course causes small problems in terms of funding, but then it went very well for them, there is no problem, but you have to keep that in mind.

And then if I can make a little anecdote for your subscribers, the interesting thing is that me, as a Westerner, I’m based in Switzerland, as a Westerner operating on the ground in Congo, the hype aspect of some metals I observe it directly on WhatsApp. Because when the demand is high, I have videos of people saying to me: “I have lithium, so come and buy me the lithium…” And right now, when gold passes $2000, once about every week I have videos of people saying to me, “I have 2, 3 kilos of gold, do you want to buy them?

Well, of course, it doesn’t work that way; at least not for us.

But, it’s fun to see the hype… By the way, as we just talked about gold, right now, of course, it’s a big trend. You asked what the conditions were? The first is physical security. There is also an essential point; it is legal certainty; that is to say that the contracts and concessions signed must be completely secure. Let’s not go back below. And it should be noted that there have been several transitions of presidency in recent decades, whether between President Mobutu, Mzee Kabila and his son, and now His Excellency Mr. Félix Tshisekedi. Contracts have never been canceled suddenly at the time of change of power; it’s something that I spend my time explaining to international investors. Afterwards, of course, there are difficulties that cause a bit of bad publicity.

Of course everyone has heard of the conflict raging between Gécamines and the big Chinese operators at the moment. When the Chinese bought the shares of Gécamines to remain alone in the projects, they were accused of having undervalued the reserves. And so that’s why we come back after several years saying “we’re going to need 1, 2, 3, 7 billion dollars to compensate for that…” And that of course is very bad for everyone.

But I would also like to point out that the contracts that are called into question are not the prerogative of the DRC. You know, President Macron who recently came to Kinshasa, his predecessor I believe, who had signed major submarine contracts in Australia, one day he was told “it’s over”. So it’s not the prerogative of the Congo, but all the same, it’s really crucial this legal certainty in my opinion.

A third aspect is the reputational risk, so here too we have to educate international investors. Tell them “no, it’s not that serious, you have to take…” Everyone believes that guerrillas are everywhere, that child labor is everywhere, that corruption is everywhere, etc. These are all caricatures. Personally, I have never seen children working in cobalt mines in Katanga. But if you ask Western journalists whether he is at the FT or The Economist or elsewhere, for them, if you talk to them about Congolese cobalt, they have the image of children digging. It’s not like that. So that too is a condition in my view. Me, I fight at my level when I make investment proposals; but the reputational risk is there.

A fourth point very quickly is that of course, we have to monitor the infrastructures, the communication channels. That’s the attractiveness of Katanga, there are good roads, but it is necessary to do maintenance on the roads. We must develop the railways, there is one. It is necessary to monitor a little bit all the constraints at the level of tolls, untimely barriers when you go to a mining site. All these are elements that block the business a little bit on a daily basis.These, of course, are efforts on which we can work. We talked about the Manono road, in the rainy season it is two days with a twelve-hour jump from Lubumbashi.

I want to mention one last point, and that the Congolese who know will smile gently, do you know how many services there are working at the border in Kasumbalesa, that are at the level of export and import ? So I did not count. But there is an implausible accumulation of service; so there is the DGDA, customs, there is the Congolese control office OCC, so as far as the quality of the products is concerned coming in and going out, there is the DGM to check who is coming in, who is going out, the truck drivers, etc. There was the quarantine at the level of the Covid for hygiene; there are the services of the sovereign State, the ANR, which is also present. There is the mining division which asks for its contribution for the transport of minerals. DEKAT is yet another state service. So there is an accumulation of state services which each require their own fees, at their own expense I would say…

Arthur Katalayi: Wouldn’t it be ideal to centralize all that or try to centralize as much as possible?

Charles Mesnil: So that is indeed ideal. This is absolutely the obvious solution. But we must also recognize that the Congolese have a certain pragmatism.

That is to say that all these state services are so accustomed to dealing with them that basically it happens on the model of a one-stop shop. But don’t underestimate the fact that if there’s the slightest problem with just one of these services, your truck is stuck. And you can’t change that.

Arthur Katalayi: The mining industry aims to be carbon neutral before 2050. Is this achievable given current trends, and is it a priority?

Charles Mesnil: So, I can say my true opinion on this. Personally, I have big doubts about this story of carbon neutrality even in the Western world. Just a small example, the European parliament as one man had voted for the end of thermal engines on vehicles by 2035, Germany has just reversed course. So, personally, if I see Germany backtracking, I can’t see the Congo rushing into something that seems quite dogmatic to me and then afterwards, for carbon neutrality, we have to observe things as they are today. I don’t want to go too far on this because maybe we can come back to it a bit later.

But I’m not a real energy specialist and to be honest with you, I see that practically only a large part of the energy that is consumed in Katanga, especially in the slightly mining areas that are not connected to the Grid, is all that is on fuel. So if you ask me the obvious condition, it seems to me that it is the development of the Inga dam on the Congo River. The last time I was interested in the question, there were still a number of turbines of the old Inga dam which were broken down, no longer operational. There is the big Inga dam, like at the moment. There, we also have it; it is a sine qua non. And then the rehabilitation of the network itself, that is to say the distribution, the power lines etc.

But one thing must still be said, and that is that once again, in the Congo, people are lucky to have one of the most powerful rivers in the world, which can provide them with electricity that irrigates the whole region and not just the Congo.

Arthur Katalayi: To continue on this energy issue, energy prices have reached record levels in recent months, also a consequence of geopolitics. And it looks like there won’t be a significant drop in the future. And the energy deficit has its limits in the DRC, sometimes the ability to launch new large-scale projects. Do you have any idea on how to fix this? Even if you have already given part of the answer.

Charles Mesnil: So absolutely. Well, once again, we are getting out of my area of expertise a little bit. But let’s say I have an end-user approach to the matter. All I see is that, indeed, the energy that is consumed in Katanga, especially in transport, but also for electricity. It is essentially the fuel, it is the diesel etc. And it is enough to observe the number not only of trucks, tanker trucks which transit, for what is observable… But everywhere the people, all the administrations, the airport of course, all these areas are powered by emergency generators. Because of course some of these services cannot fall into a decanter to say it like that. Because SNEL is out of stock and unfortunately it happens a lot. Now I would still like to make a clarification; I have South African friends who come to Kinshasa or Lubumbashi who tell me: “Now, we in Johannesburg, we have power cuts from 10 to 12 hours a day …” And in Congo, at the moment, we are 4 hours away. So there’s still something quite ironic about that, isn’t there?

Arthur Katalayi: Quickly on offer, we were talking earlier about Qatar and Saudi Arabia, it’s true that in Congo, we still don’t want a monopoly, but a lot of mines are in operation with Chinese ownership, total or partial.

What do you think of the diversification of foreign investors and operators for the Congolese economy? It is something that would do the country good. Or else we must continue on the current path and then simply not diversify into the pool of operators.

Charles Mesnil: So, I think that here we quickly come across geostrategic aspects because the war in Ukraine polarized the world in a fairly obvious way between a Western bloc and an alternative bloc. So, a reverse globalization is led by the BRICS, behind China, behind Russia, and even very big powers such as India. And we finally find ourselves in a configuration where the world is separated.

The position of the Congo, for me, of course, I cannot judge it. And it’s very difficult to say who the Congo should turn to, but of course as an independent country that is looking for its own path. Willingly, the Congo must seek partners with all the countries that have been mentioned. I think India in particular, and it’s a very independent partner which is natural. Saudi Arabia is totally extraordinary, we would never have thought to see this, but Saudi Arabia is breaking away from the American bloc. Saudi Arabia can play its game and cooperate with the Congo.

Of course, I am not talking about China, which is extremely present in the Congo. It’s been for years, it’s like a love story, and there are ups and downs. But I believe that they are there and I think that the thing that appeals to me the most in what you say is to see the absence of the historical European countries that were present in Africa before. I’m talking about Belgium for you Congolese, but France, the United Kingdom and the United States I see very little presence of these countries in mining.

Arthur Katalayi: And what do you think is due to?

Charles Mesnil: So I think there are a lot of reasons. One of the reasons that is obvious was that there was a lack of interest in the mining sector and it was the “daddy” economy, nobody is interested, you know, “we Americans, we are a lot smarter, we’re doing high-tech services, we’ve done artificial intelligence, we’re not going to start looking for manganese, … It’s too low! »

So there is still a trendy aspect that should not be underestimated. And I’ll give you an example, you know that in the United States 20% of the American GDP, is related to legal fees? You have to realize that, i.e. its service, lawyer’s fees, legal expertise, its compensation payments, etc.

So what is the end value in people’s wealth? I tend to say it’s selling wind at the end, but that’s my opinion. And so all that is something that has heavily impacted the whole mentality of generations of students who would have felt dishonored to dive into mining and, that’s why I didn’t see them. Canadians and Australians are a little different because they have mines on their soil and so they are used to that, it’s part of their culture. But for the others, I don’t see any Germans here, I don’t see any French people, I don’t see any Belgian and it’s very interesting to see. And you know what’s more damaging? It’s because here too, you have to talk to the old people and those who are in the field. They tell you “you know? there is great wealth here on the farm, on the farm which is located here, around Kolwezi, the Belgians had they had a farm… I’m sure there was gold and rubies. Well then you ask and then there they tell you “… No but in fact, in Belgium, there is indeed a library where…” but I’ve never been, so I’m not going to go too far…There, the Belgians had made an extremely precise map of the mining resources in the Congo in general and in Katanga in particular, and you can go there, you cannot take photos and you cannot make copies. So that’s it, but all that to say that they have the resources and the knowledge of the field. But there is not a single Belgian mine here, it’s strange.

Arthur Katalayi: We’re going to switch to the last question, the show is called The Right Advice. Throughout your background and your expertise in mining and international finance, what advice(s) would you give to future operators in the sector wishing to seize opportunities in the mining industry over the coming decades?

Charles Mesnil: So I tend to give general advice. Because of course it is not a question here of saying about such an area, be careful, it is sulfide copper, and you will need such a machine …

Arthur Katalayi: Because it’s not an easy industry to access, the Congolese mining industry, that is also something that should be mentioned.

Charles Mesnil: So absolutely. And then of course, you have extremely different investment details depending on your production plan depending on the metal you process, etc. There are a number of people who are very rich around Bukavu or Goma and they don’t have the first machine and yet they export coltan, without any investment, but it happens that if you go and visit the Mutanda mine on the outskirts of Kolwezi, the value of the investments is in the hundreds of millions of dollars. So there really is the whole spectrum. I prefer to focus on somewhat general advice, so I would say learn patience, listening, respect for people and the local culture.

Otherwise, of course, if one arrives with Western mentality patterns, etc. We lose patience quickly, we get angry for a lot of things. A second advice that I could give, there too, it’s a temptation it’s not to skip the stages. That is to say, you will always have the temptation to cut corners, to tell yourself “I am going in circles and…” Quite simply to pay for a quick stamp on a document. So I strongly advise against it, because you will certainly save time, but you are totally at the mercy of the person who gave you a stamp. If that person changes his position, his successor will come to look at the paper and say, “What is that? “ And then your permits may be cancelled, it’s as simple as that. So you have to do things right, it doesn’t stop you from being nice to people. I even think it’s recommendable. And then things take their course, and it can go well.

I will go between one last tip while it is a little bit related to the previous amount. It is that, of course, we are not going to hide our face, and we are not going to hide behind our little finger, of course there is corruption in Congo. I don’t think I’m learning it. There is corruption everywhere, there is in the Congo. That does not prevent us, we, Western investors, Western operators, me personally, I have a partnership with a Congolese partner and friend who is the majority owner in the company. But above all, you have to remain faithful to the ethics and the business approach that we have in the West. We must not believe that it is because we arrived in the Congo that it is the Far West. So you’ll always have someone saying to you, “Listen, for you, his age, I’ll put a team of five villagers for you who will dig you up to twenty meters…” Fine. And if the hole collapses, that’s 5 dead. Me it’s not something that I do and then you have to be careful. Anything that can impact you as a Westerner…your ESG Scorecard. So, your responsibility, the environment, all that, is analyzed by Western Stock Exchanges, by analysts, by activist funds, by Blackrock today; Blackrock does not invest in your mining operation, if your ESG Scorecard is not good. So it all depends on where you want to go. I say don’t be cowboys. And then, there is still an example, I will not give names, but people find it on the Internet. Quickly, there is nevertheless a great Franco-Swiss leader who went to Abidjan to sell a project that had a major pollution issues which led to many deaths, and incredible damage and he found himself a month in prison. In Abidjan, that story is starting to date a bit. But it is quite well known and that is what awaits people who think that we can do absolutely anything on the pretext that the state has a presence, say, less involved than in the US or in German; What!

That’s it, it’s a little bit of the 3 tips I would have, general advice, which I strongly recommend to listen to here!

Arthur Katalayi: In any case, they are very valuable. Thank you very much Mr. Mesnil for having received us in your offices.

Charles Mesnil: With pleasure. Thank you very much, it was my pleasure.