Severe problems with distribution infrastructure also render the power supply unreliable.
The Congo River has the potential to generate enough electrical energy to supply the whole of Southern Africa. Yet, only a fraction of this immense force has been harnessed. Today, it is almost universally acknowledged that the biggest setback to industrial growth in the DRC is the lack of reliable power supply.
In theory, the country’s total installed capacity stands at 2,100 megawatts (MW), with the most important contributor being the 1,424-MW Inga II plant. However, the dam is poorly maintained and on most days it delivers much less than its nameplate capacity. Total demand in the southern region alone has risen from 400 MW in 2008 to 1,200 MW in 2014. If all planned mining projects come online according to schedule, demand is projected to soar to 2,500 MW by 2016.
This leaves the National Electricity Company (SNEL) in a very uncomfortable position. Demand for electricity keeps increasing and it is already unable to fulfill commitments to its existing clients. In 2011, Somika came to an agreement with SNEL whereby they would receive 22 MW from the grid as their operation reached capacity. “Unfortunately, the power supply crisis of the last three years has prevented us from receiving the full amount,” explained Chairman, Chetan Chug. “On average we probably receive around 7 MW from the grid.”
Aside from the insufficient generation capacity, SNEL suffers from severe problems with its distribution infrastructure. Pylons, transformers and sub-stations are routinely vandalized and power outages are common. Some miners report experiencing up to nine power cuts in a single day. This has dire consequences for mines and processing plants. If a production cycle at an SX-EW plant is interrupted due to an outage it can take 45 minutes to restart the equipment. When this happens multiple times per day, downtime starts to impact seriously on production capacity and eat into profits.
To make up for the supply shortfall, mines rely heavily on diesel generators. This is a very costly means of producing electricity. While falling oil prices should have softened the blow somewhat, DRC fuel taxes rose throughout 2014 to the point where there has been very little real-term reduction in cost.
One might expect that in this situation some of the larger miners might have invested in larger, more sustainable generation programs, but so far this has not been the case. “Solar and wind farms as well as small hydro plants are all viable options but the cost for one mine to commit to such an undertaking would be prohibitive,” explains Ruashi Mining’s general manager, Marius Boates. “It will need a consortium of several mines to bring anything meaningful to fruition.” Given that most of the DRC’s mines are only just beginning to turn a profit, it might be premature to expect any developments of this kind right away, but it is likely to become an increasingly attractive option in the long-term.
In an effort to remedy the current situation some big mines have started to collaborate with SNEL, lending out of their own pockets to fund infrastructure rehabilitation programs. TFM lent approximately $140 million towards the Nseke power plant, while Ruashi Mining invested $4 million in a project to strengthen Lubumbashi’s urban distribution network. Tiger Resources is currently replacing approximately 240 km of overhead power lines between Lubumbashi and their site at Kipoi. “The existing lines can only handle 90 MVA but the new lines will take 120 MVA thus reducing line losses and saving 20 MW,” claimed COO Charles Brown. “This will ultimately reduce our cash cost by around $0.20/lb.”
Until more capacity comes online, the industry remains stuck in a holding pattern. Mines are unable to expand, even if they have the resources, because it is impossible to predict the cost of electricity. Meanwhile, the government’s long-term strategy to move away from concentrate exports and encourage more domestic beneficiation makes little sense while there is not enough power to drive the plants.
Nevertheless, there is some hope on the horizon. In 2013, SNEL and its Zambian counterpart, Zesco, signed an agreement to jointly develop a $3 billion, 1,400-MW plant, which should be operational by 2017. Output will be distributed evenly between the DRC and Zambia. Work is already being carried out on two smaller projects in the Kolwezi area – Busanga (240 MW) and Nzilo II (120 MW) – but it is unclear how long it will take before these begin to contribute to the grid.
Looking even further ahead, there is also the Inga III project, which is slated to generate an additional 4,800 MW, of which half will be exported to South Africa. The $12 billion investment is envisioned as the first phase in the development of the Grand Inga dam, which would be the largest hydroelectric plant in the world, generating some 42,000 MW and doubling Africa’s total generation capacity in one fell swoop. However, with an estimated price tag of $50 billion, some analysts are skeptical that it will ever become a reality, leading to its nickname of Africa’s biggest white elephant.
This article was written as part of research being conducted by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2016. A pre-release report on the Central African Copperbelt was released in May 2015 and can be accessed here. To participate in this report, please contact Molly Concannon at email@example.com or +243(0)826300684.