DR Congo diamond firms need $300 mln: official

Democratic Republic of Congo needs to invest some $300 million in its industrial diamond mining operations to revive a flagging sector and boost government revenue, a top mining official said.

Output from state diamond mining firms MIBA and SCIM is restarting after shutting in 2008, but the state's share of revenues remains small due to weakly enforced regulation, said Hubert Kazadi, managing director of SCIM, in a presentation to a mining conference this week.

Both firms also face a threat from artisanal miners -- people who mine independently -- who invade their properties to steal stones, he added.

The need for capital so that these companies can exploit these reserves is around $150 million each, Kazadi said.

Congo is rich in diamonds, but the state receives just a fraction of the revenues generated from the sector, which like most in the country's mining industry lacks financing and has been crippled by years of poor management.

According to Congo's mining code, the state should receive some 30 percent in tax from diamond sales, Kazadi said. However, in 2004, when Congo produced a record $1 billion worth of diamonds, the treasury collected just $40 million.

Kazadi did not give more up-to-date figures or any details on when the investment might be made in the two firms. He said they had some 328 million carats of reserves in their concessions in central-southern Congo.

After decades of industrial production came to a halt in 2008 due to neglect, Congo's diamond mining has been dominated by output from several hundred thousand artisanal miners, who are much harder to regulate.

Kazadi said that reserves in artisanal mining areas had largely been exhausted, and so many small-scale miners were trying to tap into the industrial complexes, raising security costs.

Without resolving the problem of (this) cohabitation with the artisanal miners, neither of the two (state) companies will be able to guarantee a profitable investment, Kazadi said.