Cassiterite, the primary ore source of tindizainera/Getty Images/iStockphoto
When police detained a top executive of Alphamin Resources Corp. last month in Congo, it was just the latest uncomfortable reminder that the Toronto-listed mining company is operating in a rough neighbourhood.
Civil war, violent militias and police harassment are just a few of the challenges that Alphamin faces as it develops the first industrial mine in North Kivu, an impoverished and war-torn province of the Democratic Republic of the Congo.
With tin prices rising, the company says it can offer an impressive 48-per-cent return to those who invest in its $110-million (U.S.) mine in eastern Congo. It insists that the dangers are exaggerated.
But when it made its pitch at a mining conference in Johannesburg on Thursday, some financial institutions were skeptical. An executive at a Chinese bank told the conference that the Alphamin mine is located in "murder mile." A South African banker said the project is too risky for his bank because "the gun smoke is still clearing."
Armed militias have attacked the Alphamin site as recently as 2014, although the company says they are not near the site any more. It says it has close contacts with the Congolese military and United Nations peacekeepers in case of future threats.
Then there are the police. Richard Robinson, managing director of Alphamin's subsidiary in Congo, was detained by police in eastern Congo on Sept. 16 and ordered to travel to Kinshasa, the capital, about 1,500 kilometres to the west. He was required to remain there for nearly two weeks, until police had finished questioning him about the legality of mineral samples that Alphamin had flown out of Congo. The company called it a "misunderstanding."
The boom in global tin prices will make the risks worthwhile, the company says. It predicts that prices will reach $22,000 a tonne, compared with about $19,950 currently, while the mine's operating costs will be $9,000 a tonne or less. Tin is used as a solder in circuit boards, allowing its producers to capitalize on the growth of the electronics industry.
But the development costs are high because of the mine's remote location. A 35-kilometre access road, including wooden bridges, had to be built entirely by hand. Communications are so poor that villagers were sending handwritten messages by "cleft stick" to the nearest town, until a cellphone tower was finally built recently, the company says.
Aside from agriculture and artisanal mining – a crude form of mining by hand, often controlled by militias – there is virtually no other economic development in North Kivu. With about 400 workers, Alphamin says it is already the biggest employer in the province. Its mine is expected to begin production by the end of 2018.
Boris Kamstra, chief executive officer of Alphamin, told the mining conference that North Kivu has had "a little bit of a tricky past" – a mild way of describing 20 years of war and violence.
But he said the mine can help to stabilize the region and improve its infrastructure.
In an interview, Mr. Kamstra cited the example of another Canadian company, Banro Corp., which developed the first modern mine in South Kivu, an adjoining province. Banro faced a "terrifying environment" when it built its gold mine in a remote region, but investors can now easily drive to the site, he said.
As for the security risks, Mr. Kamstra said he feels safer in a tent in the jungle at his mine site than he does on the crime-ridden streets of Johannesburg.