Trade stats reflect simmering pressure in DRC

Political turmoil in the
Democratic Republic of the
Congo (DRC) and a failing
global commodity market
have combined to dent twoway
DRC trade with SA.
The simmering
pressure underlying
the socio-political
skin in the DRC
should not
be termed a
potential
‘civil war’,
said Afritrade
expert Duncan Bonnett
of Whitehouse & Associates,
but rather a ‘commodities war’.
Power, prestige and fortune
all depend on the control of
the country’s copper reserves.
And the latest news of the
“I’m not budging” former
president Joseph Kabila;
the death at 84 of “The Old
Man” Etienne Tshisekedi,
opposition chief and tasked
with guiding the negotiations
in a power-sharing deal
agreed on New Year’s Eve to
avoid fresh violence; and the
still low copper price, are all
causes or effects of the battle
for control.
And all this whips up
pressure on the country’s
trade and economy,
according to Bonnett.
But he added that
everything was
dictated to by the
fortunes of the red
metal market. DRC
is the continent’s
biggest producer,
with its Kamoa
and Tenke
Fungurume
projects
alone reputably the second
and third biggest copper
reserves in the world.
China accounts for 40% of
global demand, so the global
copper price means the red
metal’s price more precisely
mirrors the Middle Kingdom’s
fortunes than anything else.
Thus, with the global
crisis having
slowed down
the global
economic
giant, Chinese
demand and
price for the
mineral went
through the
floor.
This was a
lingering twoyear
red metal
low, and the
country’s chamber of mines
has acknowledged that, even
now, low commodity prices
continue to bite.
“The drop in copper prices
had a big effect on things
like mining projects, retail
development and industrial
expansion,” said Bonnett.
“Low revenue from that would
have a very definite effect on
the DRC economy.”
And this effect impacts on
SA.
Bilateral trade is heavily
skewed in our favour, because
of the limited productive
capacity of the DRC economy.
SA is the DRC’s biggest
supplier of foreign goods
and services,
providing more
than 21% of
the country’s
total imports.
“SA exports
to the DRC
broke the R17
billion barrier
in 2016,”
Bonnett told
FTW. “SA
imports, R300
million.”
But the copper sun is
beginning to break through
the cloud, and prices are
beginning to brighten.
A strike at the world’s
largest copper mine in
Chile and small recoveries
in Chinese output and trade
have helped to add to the
shine.
INSERT AND CAPTION
SA exports to the
DRC broke the R17
billion barrier in
2016.
– Duncan Bonnett