Alphamin works towards a new tin network in the DRC
Alphamin Resources took over the Bisie tin mining project in the north-eastern province of Kivu in the Democratic Republic of the Congo from Kivu Resources in 2012, and the company is confident it is sitting on the best tin resource in the world. But in a challenging location and at a tricky time for the tin industry will it be able to turn a profit? And what will it cost the locals and the environment? Molly Lempriere finds out.
The Bisie tin mining project in the Democratic Republic of the Congo (DRC) is expected to become the most productive in the world, with an internal return rate of 48.4%. This is predominantly due to the incredibly high-grade of the ore body, which has been re-estimated repeatedly since Alphamin Resources took over from Kivu Resources in 2012.
Currently it stands at around 4%, making it the highest-grade in the world, an important factor due mainly to the growing shortage of the resource. Alphamin Resources CEO Boris Kamstra believes that it was this percentage that “really kept us alive” as the company began this project at a point when “tin prices were falling out of the sky”.
The ability to use the tin’s high grade to encourage investment is key to the project’s success, with return for the product expected after just 23 months. The site had been used for artisanal mining since 2002, but the construction of an industrial mine is a big step.
This is likely to just be the start for Alphamin in the area however, as the Bisie project encompasses several sites, not just Mpama North where construction is underway. Down the ridge is Mpama South, the next to be developed of several in the region.
“This area is going to be the world’s next premier tin producing area,” says Kamstra. “We will generate sufficient free cashflow from [Mpama North] to be able to drill up and develop Mpama South, and we will then look at the broader area and start a programme of identifying and drilling up additional resources.”
Alphamin has high hopes for the project, with good reason if the expected return proves accurate.
The challenges of the area
Construction has started at the Mpama North site, where Alphamin is building an underground mine. The challenging terrain of the remote valley has necessitated such from an environmental and practical perspective.
“We looked around and asked the question that you’re asking me now, where do we put the spoil? And there was not really anywhere that stuck out,” Kamstra says. Thus despite the ease of an open mine, Alphamin decided to develop an underground mine, which will generate less waste rock, much of which will be used in the construction of surrounding roads.
The high-grade ore requires far less separation, reducing mining and processing costs.
“The great thing about it is you can have jig separation right up front which allows you to very, very quickly reduce the quantity of material you’re having to treat without having losses of tin in the process” says Kamstra. Alphamin expects to start mining 50m below the surface to an ultimate depth of 500m, producing ore at a rate of 350,000t a year.
Local workforce, local benefits
Bisie’s remote location is 60km from the nearest town of Walikale and 180km from the North Kivu provincial capital of Goma. The dense forest surrounding it made the construction of a road a first priority. Local workers were employed to help build the 32km road, as Kamstra notes they “understood very quickly what we were trying to achieve”. Kamstra is proud of the local crews’ “magnificent” handiwork, highlighting in particular “a series of bridges that are just absolute works of art”, all built by hand.
Alphamin has been increasing communication in the region, allowing for ease of access for health and security services to the neighbouring villages and Walikale through the new road network. Alphamin set out with the intention of the project benefitting the local community, and Alphamin has become the largest official employer in the region.
The company has also injected cash into what was originally a cashless society. An interesting indicator of this shift, Kamstra jokes, is the project’s new inability to rent trucks. When trying to rent trucks to help with construction the company found that there were none because Alphamin “started a Walikale economy, so all trucks are now ferrying beer out there”. This economy goes hand-in-hand with Alphamin’s work with the Lowa Alliance, a not-for-profit organisation which is encouraging economic and social growth in the region.
Communication has been further increased with the construction of a telephone mast at the site. Built by Vodacom, the largest provider of telecommunications in Africa, this was unprecedented in the region, and not an easy sell to Alphamin’s telecoms partner at first.
“Vodacom laughed us out of the room, but we then said we will fly your kit up, we will fly your people out, we will put the tower in the middle of the camp and look after it,” says Kamstra. “They said [we had a] deal.”
But infrastructure has a knock-on effect on the environment. Although the project conforms to the DRC’s Environmental Protection Act of 2012, there will be a massive effect on the local area. While much of the site was already clear due to the artisanal mining, forest has been cleared to build roads.
Resources have come predominantly from the area, with the bridges built with the removed trees and the roads paved with the spoil of the mine. Minimising material imports is a positive in an “area [that] is not full of rock that one would normally be able to crush and put on a road, because it’s very old and very deeply weathered”, Kamstra notes.
There are other environmental footprints, however, not least the energy required to run a mine. It needs 3.6MW to run, which is being created by an onsite diesel-powered generator that needs 500,000l of diesel fuel per month to run. On top of this is the pollution the trucks create, and the planned expansion of the site will increase these factors.
The security legacy of DRC’s rocky past
For anyone investing in the DRC, site and worker security is paramount. In a country ravaged by civil war and with a history of corrupt officials and militia groups, the project’s vast economic investment (pre-production capital cost of $134.2m) is not without risk.
The situation is not as dangerous as it first appears, Kamstra insists, arguing that the idea of North Kivu being full of rebel groups is an outdated narrative. He also notes that the security situation is improved by the region’s new infrastructure, which facilitates emergency service access, particularly that of the military and UN stabilisation mission MONUSCO, with which Alphamin is in constant contact.
Alphamin appears positive about the current situation in North Kivu, with Kamstra even joking that “I lived in Johannesburg” when asked if security concerns him. “The last rebel group was the M23 and they were roundly beaten and dispatched on their way,” he says, leaving just commercial criminals.
But this is possibly a less stable time in the Congo than Kamstra’s assertions would suggest, with an upcoming election already causing bloodshed. Originally expected in December 2016, President Joseph Kabila (a strong supporter of the Alphamin mine) has delayed the organisation of the election, amid claims he will refuse to step down. Political protestors have clashed with police, and there are fears that should President Kabila refuse to relinquish power at the end of his second term it will promote nationwide instability. Despite such risks, Kamstra insists that Alphamin “would not put men up there should we believe that we were putting them in danger”.
A conflict-free future
Something which adds an extra level of security to the site is the legislation which it must operate within. The Bisie project is one of the first in the DRC to be subject to the Dodd-Frank Act, introduced by the US in 2010 with provisions to help quash conflict mining. This is particularly relevant in the DRC, a country whose abundance of natural resources has been used to fund criminal groups in the past.
Kamstra describes Dodd-Frank as a “conflict-free smelt initiative” which dictates all ore must be certified as conflict-free or smelters will refuse to purchase the product. This is something Alphamin embraces, and it is currently working to develop protocols to ensure that Bisie’s tin is conflict-free. This should help to bring greater stability to the area but also works as an insurance policy for the company, ensuring it is the only seller of its tin.
The Bisie project has a lot going for it; not least the exceptional grade of the ore ensuring financing and reduced mining costs. But while Alphamin seems to be coping well with the remote and dangerous location thus far, it will undoubtedly continue to present challenges as the project develops and expands. Although it is essential that the project continues to benefit the people and does not just reap the resources of a still unstable country, Alphamin seems to be off to a good start.