SA’s influence felt in start of African tin mine

Source: BusinessLive

Two global events have led to development of a long-dormant deposit at Bisie — in thick forest in the war-torn corner of the Democratic Republic of Congo — in what will become Africa’s only formal tin mining operation.

SA’s last two tin mines, Rooiberg and Zaaiplaats, closed in the 1990s because of age and low tin prices. But after the recent surge in tin prices to about $20,800 a tonne from $13,350 a tonne in January 2016, other companies are also looking at previously unviable deposits.

Underpinning tin prices are a shortage of new mines and EU legislation enacted in 2006 requiring lead solder to be phased out of consumer electronics. It has been substituted with a mix containing 95% tin.

The other trigger for the Bisie development was the passing of the Dodd-Frank Act in the US, which contains provisions to prevent four key minerals (tin, tantalum, tungsten and gold) mined in the Great Lakes region from being used to finance armed conflicts.

Now smelters can buy tin only from certificated sources, so untraceable tin is sold at a deep discount. That drove most of the up to 15,000 artisanal miners at Bisie to leave, allowing Alphamin to access the site for exploration.

Bisie, about 200km from Goma in North Kivu, was overrun by rebel groups who fled Rwanda in the aftermath of the 1994 genocide.

Alphamin Bisie Mining (ABM) is 80.75%-owned by Toronto-listed Alphamin Resources, 14.25% by SA’s Industrial Development Corporation (IDC) and 5% by the Congolese government. Alphamin Resources is chaired by former Metorex CEO Charles Needham and its major shareholder is Tremont Master Holdings, an investment vehicle of Denham Capital. Denham Capital is advised by South African mining entrepreneur Rob Still. Alphamin’s CEO is Boris Kamstra, who previously worked at Grinaker Construction and Pangea DiamondFields.

ABM has already begun work on a 32km access road, entrance portal and ventilation shaft and installing a crusher at Bisie while Alphamin finalises the debt portion of the $170m capital cost of the mine, including a $15m contingency.

Funding will be about half debt and half equity. Although there is extensive South African involvement in Bisie through the IDC, the management team and contractors DRA and in sourcing most of the equipment and materials, Kamstra says Alphamin is not planning a secondary listing on the JSE to assist with the equity portion. The shares can be accessed in Toronto.

Richard Robinson, MD of ABM, says political uncertainty over the re-election of Joseph Kabila as president is unlikely to affect Bisie’s development because it is in the national interest to develop a formal tin mine in North Kivu.

North Kivu minister of mines Anselme Kitakya says Bisie represents the revival of historical mining activity in the province and will generate employment and tax revenue.

If it succeeds, it will demonstrate that mining is possible in the province and encourage other investors to follow, he says.

Robinson says there are still about 1,100 registered artisanal miners close to the mine site and the company is considering solutions to move them away with their co-operation, possibly to other areas where they could operate.

Up to a quarter of Bisie’s workforce are former artisanals, but the priority is to employ people from the local area, Robinson says.

Bisie is trying to develop local business opportunities, with about 4% of its in-country spending going to the local community, he says.

One of Bisie’s biggest challenges is logistics. It takes up to six weeks to transport material 1,800km-2,300km from Johannesburg by road and sea because of the state of the roads. Alphamin has budgeted $4.5m to fix the worst parts of the road from Goma to the nearest village of Walikali and hopes to leverage $10m-$15m more from donor institutions.

Although tin prices have ranged widely, reaching as high as $33,000 a tonne in 2011, the mine would make a profit even at the recent low of $13,500 a tonne. It is targeting an average of 9,600 tonnes a year at a cost of $10,359 a tonne sold after duties, royalties, levies and marketing fees, putting it in the lowest-cost quartile.

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