"We will continue to be stronger in copper and cobalt than tin and tantalite. We are also starting to look into lithium businesses. We will also continue to look for future opportunities in rare earths by evaluating potential of different concessions."

Chetan Chug

MANAGING DIRECTOR, SOMIKA

October 16, 2018

 Can you share any recent updates for SOMIKA and how they will help the company achieve its 2019 vision?

We began 2018 by taking 100% control of our concession ‘Luputo 2590’. Our subsidiary, Iverland, used to hold 80%, with another partner holding 20%. We were also able to discuss with Gécamines the transfer of the B2590 amodiation from Iverland to Somika because of our strength in terms of processing. Somika is now a fully integrated mine to metal operation, and we are now planning the expansion of 70,000 tonnes of copper by 2020 and 7,000 tonnes of cobalt and these changes will make this even more achievable.

SOMIKA is currently the largest exporter of tin in the country, but Alphamin is set to come online in 2019. How do you expect this increased production to impact SOMIKA and the local tin market?

The tin market is growing because in addition to cobalt, nickel and lithium, the development of electrical vehicles also requires tin. The development of Alphamin can only be a good thing because the increased quantity of product exiting the country will help streamline certain conversations between the government. I believe the global market will be happy to see there is another valuable mineral available from the DRC. Rather than viewing each other as competitors, Alphamin and SOMIKA will share complementary knowledge and experiences about processing and exploration strategy.

SOMIKA operates across a full range of different metals. Where will be the primary focus for the company heading into 2019?

We will continue to be stronger in copper and cobalt than tin and tantalite. We are also starting to look into lithium businesses. We will also continue to look for future opportunities in rare earths by evaluating potential of different concessions. By 2019 and 2020, we may begin to strengthen the diversity of our portfolio with other valuable metals.

Where does SOMIKA see the most opportunity for exploration of tin and tantalite?

Currently we are remaining focused within the four new provinces that comprise the former Katanga region, but we are also looking at opportunities in the Maniema province in the Kindu area. Because of logistical challenges, we have slowed down a little, but that remains an area of interest for the expansion of our tin and tantalite business.

How will the new mining code impact SOMIKA?

The new mining code certainly has financial implications for us, including new taxes to pay on imports and exports. However, as long as commodity prices continue to remain strong, we do not expect much impact. If the government will contribute more support to the mining industry through this added revenue by strengthening key infrastructure like transport and power, then I believe we will ultimately see a positive impact.

Can you update us on the strategy that SOMIKA has in place to adapt to the power deficit here in DRC and your outlook on the situation as energy demand increases? 

We source our power through SNEL and by importing some from ZESCO in Zambia. There is also an opportunity to bring in power from Congo-Brazzaville through Katanga Energy, which has signed an MOU with that grid. Yes, there is a deficit, but there is activity that demonstrates that projects will soon come online, such as Busanga from the Chinese. There could be an overlap between the energy gap and the expansion of production in the country, but if more projects are able to successfully come online, I believe this deficit can be controlled.

How has SOMIKA seen the artisanal mining of cobalt evolve following the company's initial support of international controls?

Cobalt discovery and entry into the market first began in this country in 2002 through artisanal mining, which is often unsafe and done without proper training or equipment. Over time, this dynamic has changed and today, in terms of volumes, artisanal mining of cobalt accounts for around 10 - 15% of market production. This movement towards structured mining and processing operations will continue, which is a positive development, but artisanal mining is a livelihood and if you take that away without providing an alternative option, problems will arise. As a mining company, we are searching for other options for artisanal workers to see how we can help. SOMIKA expects to implement a strategy in 6-8 months to put in place an education system for the children of artisanal miners, in addition to providing training in certain soft skills.  The Lualaba province has been particularly proactive in generating jobs through the development of the agriculture and tourism sectors.

What vision does SOMIKA have for itself going forward and will in-country manufacturing eventually be an avenue of interest to the company?

SOMIKA will continue to focus on reaching our copper and cobalt production targets, but apart from that we will also look to develop our other services-based companies in our Group. These companies ensure alternative sources of employment, sustainable local enterprenuership, and reduced imports. We are conducting some studies to explore the possibility of doing finished products in-country, and eventually this could be an interesting route once the demand of the local market is sufficient. 

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