June 4, 2016 / 8:17 PM / 2 years ago

Congo copper production down 20 pct in Q1 amid market slump

KINSHASA, June 4 (Reuters) - Copper production in Democratic Republic of Congo, Africa’s top miner of the metal, dropped 20 percent in the first quarter of 2016, while cobalt and gold output also slumped amid low prices and production cutbacks, the central bank said on Saturday.

The declines are hammering Congo’s economy, which derives 98 percent of its export earnings from extractive industries.

Last month, the government proposed a 22 percent cut to the current year’s budget due to lower-than-expected revenues from the mining sector and fears of inflation due to exchange rate pressures.

Congo mined 219,009 tonnes of copper in the first three months of the year compared with 274,201 tonnes over the same period last year, the central bank said in a monthly bulletin.

Meanwhile, output of cobalt, the metal used in lithium-ion batteries and of which Congo is the world’s leading producer, fell over 19 percent to 16,396 tonnes in the first quarter of 2016.

Benchmark copper on the London Metal Exchange lost 25 percent of its value in 2015 and is down slightly this year. In response, Glencore’s Katanga unit, one of the country’s largest copper and cobalt producers, announced an 18-month suspension of operations last September and other large mines have laid off workers.

Quarterly gold production declined to 7,166 kilograms this year from 7,801 kg last year, an 8 percent slide.

Large new gold mines opened by companies like Randgold Resources, AngloGold Ashanti and Banro Corporation in the last five years boosted Congo’s industrial gold output from near zero in 2011 to over 30 tonnes last year.

Spot gold prices are up 14 percent this year but Randgold says it expects production at Kibali, the country’s largest gold mine, to fall 5 percent this year because it is mining lower grade ore. (Reporting By Aaron Ross; Editing by Clelia Oziel)

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