Related News

TDB further bolsters African trade finance offering with US$100mn UK-backed facility

World Bank to revamp guarantee business

Miga sticks by €349mn guarantee for African trade finance

Standard Chartered nears agreement on Miga-backed Senegal government loan

Morocco fertiliser giant wins World Bank trade commitment

The Multilateral Investment Guarantee Agency (Miga), a member of the World Bank Group, is providing US$13.3mn in guarantee coverage for the Dikulushi copper and silver mine in the Democratic Republic of Congo (DRC). Half of the guarantee amount will be covered by Lloyd’s of London insurer Beazley and by Chubb through Miga’s Cooperative Underwriting Program.

 

This is the first extractive industries project to be considered and approved by the board of the World Bank Group since conclusion of the bank-sponsored Extractive Industries Review in August 2004. The guarantee also marks Miga’s first guarantee for a project in the DRC, which became a member of the agency in 2003.

 

The guarantees will cover investments and loans by Anvil Mining of Canada and RMB International (Dublin) of Ireland to Anvil Mining Congo, of the DRC against the risks of transfer restriction, expropriation, breach of contract, war and civil disturbance. The project involves open pit mining of copper and silver ores to produce a concentrate, which will then be trucked to smelters in South Africa and Namibia for further processing.

 

In coordination with Miga, Anvil has established a profit-sharing mechanism to ensure that local communities will benefit from the development of the Dikulushi deposit. The company has pledged 10% of its interest in the mine to a trust structure. Dividends will fund a community development program administered by a local non-governmental organisation (NGO). Anvil is currently evaluating potential associations with a suitable NGO, al-ready active in the DRC, to help implement the community development programmes.

 

This innovative profit-sharing structure reflects lessons learned from the Extractive Industries Review. Previous models of revenue sharing in the mining sector usually involved a minority percentage payment to the central government, to be used as the authorities saw fit. This did not always trans-late into benefits for the local communities impacted by the development of mine sites. In this case, Anvil Mining held the view that investing in the community was just as important as investing in capital, and was eager to ensure local ownership in the investment.

 

“We believe this project offers significant and innovative development impacts,” says Miga executive vice-president Yukiko Omura. “The collaboration between Miga, government officials, the investors, and local communities has been in the works for a long time, and we look forward to seeing the people of DRC begin to derive benefits from this undertaking.”

 

The community development programme, which is expected to receive US$5mn to US$7mn in funds over the next five or six years, includes investments in education, health care, and micro-enterprise and infrastructure development.

 

 

Anvil has already begun implementation of a number of the community projects:

  • A primary school of seven classrooms is 90% complete and now functioning in the village of Dikulushi. Construction of a preschool in the village of Lumketi (9km north of the mine) is about to start. The mine also pro-vides free busing between Dikulushi and Kilwa for mine staff and their families, many of whom are students.
  • Anvil is funding a small clinic at the mine site for miners and their families. The facility is staffed by a part-time doctor and full-time nurse. A preventative HIV/Aids programme is being implemented. The mine is working with Kilwa’s village council to upgrade and overhaul the clinic, which is the only facility in the district providing basic surgery and maternity support.
  • Anvil has begun installing a water reticulation system in the village of Pweto and plans to extend the system to the village of Kilwa.
  • The investor has begun refurbishing the regional base hospital in Kilwa.

 

The project is also spurring infrastructure improvements, including the construction and maintenance of a 54km road from the Dikulushi mine to the port of Kilwa. Locals from villages located near this road now use it for travel, and a micro-enterprise biking industry has also sprung up.

 

 

The project has also developed port facilities on Lake Mweru, on the DRC and Zambia sides, where the ore is transported for processing by trucks for further processing. In addition, the company has constructed a water pipeline to Dikulushi village (4km from the mine site) and set up additional water tanks to distribute potable water.

 

 

Anvil has also drilled water wells for several lo-cal villages and plans to improve the distribution of potable water to other nearby towns.

 

This is a greenfield investment that currently employs 614 people, 590 of whom are Congolese, and 24 of whom are from various other countries.

 

 

Before establishment of the mine, per capita income in the region was less than US$0.50 per day, derived almost exclusively from subsistence farming and fishing. Dikulushi miners are paid at levels in line with miners throughout the DRC Copperbelt. Because the mine is a new greenfield operation, Miga’s due diligence also included an evaluation of the first phase of development, including the port sites and access roads.

 

“This project is an important step in using the DRC’s natural resources in an environmentally and socially responsible way, while also maximising the benefit to local communities,” says Omura.