Congo's state diamond miner MIBA is close to signing a $140 million loan deal with South African state lenders to rebuild its infrastructure and restart industrial mining operations, a senior company official said.
But the troubled company in war-ravaged Democratic Republic of Congo still needs at least another $150 million in additional funding to rehabilitate dilapidated hydroelectric plants as power sources to underpin large-scale production.
MIBA (Societe Miniere de Bakwanga) is 20 percent owned by Africa-focused miner Mwana Africa Plc
Along with much of the mining industry in the vast central African state, a former Belgian colony, MIBA is still recovering from decades of war, looting, corruption and mismanagement.
Chief Administrative officer Paul Kabongo told Reuters MIBA was in final loan negotiations with the Industrial Development Corporation of South Africa (IDC) and the Development Bank of Southern Africa, (DBSA), both South African state entities.
We think we can finalise this within the next two months, Kabongo said in an interview late on Thursday.
The loan package is expected to include $120 million to help MIBA restart industrial mining activities with the option of an additional $20 million in standby funds.
Kabongo said the company was hoping to secure another $30 million to cover running costs.
Theft and mismanagement under former dictator Mobutu Sese Seko and a 1998-2003 war wrecked Congo's mining infrastructure.
Regional experts believe Democratic Republic of Congo may be Africa's second largest diamond producer, after Botswana and ahead of South Africa and Angola.
But MIBA, formerly a jewel of Congo's once mighty minerals industry, has been handicapped by illegal mining and smuggling, and only a fraction of the country's total diamonds output is believed to pass through the state miner.
A strike last year shut operations down entirely until the company could secure an $11 million loan to pay workers' wages.
Production fell to zero, Kabongo said. But since the beginning of December, things have begun to improve.
Kabongo said MIBA was currently turning out around 100,000 carats per month, and he believed monthly production could soon hit 200,000 carats.
But in order to reach its full production potential, MIBA must first solve chronic energy problems.
Most of its operations currently run off electricity from diesel generators, which are incapable of supporting large-scale mining and have become increasingly expensive to operate due to skyrocketing fuel prices.
Existing hydroelectric plants are a possible solution, but decades of neglect have left old equipment in ruins.
We have two old power stations that are working at just 25 percent capacity. We want to construct a new power plant. That will cost a minimum of $100 million, Kabongo said.
In the short-term, MIBA plans to rehabilitate an existing power station in a project estimated at around $25 million.
The company is examining an offer from engineering and construction firm China Gezhouba Group Company Limited.
Kabongo said discussions were underway to secure funding for the project from China Exim Bank. Earlier this year, the Chinese bank agreed to back a massive $9 billion loans-for-minerals package aimed at rebuilding Congo's infrastructure.
We are in the process of rehabilitating production capacity. If we succeed, there won't be any problem ... MIBA is a strong company, MIBA's Kabongo said. (Editing by Pascal Fletcher)
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