As part of the celebration of the World Day of Fight against Corruption, the UN Development Programme (UNDP) has initiated a contest for young people to raise awareness on this subject. An initiative supported by governments of the countries that are trying to clean up the procurement of governement contracts.

Making the Congolese youth aware of the problems created by corruption

On 18 February, at the Faculty of Letters, the UNDP’s agency based in the Congo made official the results of the competition for pupils and distributed its rewards (one year of Internet connection, one year subscription to Reading French Cultural Centre, a batch of the UN documentation and a certificate of participation).

The UNDP has also raised awareness of the hundreds of students at the convention on the fight against corruption. Comedy and drama plays, which were presented to students, illustrated the possibilities of stigmatizing corruption, fraud and embezzlement. The UN agency has already conducted seminars supporting women leaders, local elected women, parliamentarians and civil society actors on this issue.

“There is corruption in rich countries as there is corruption in poor countries. There is the evidence, however, that corruption hits the poor disproportionately. It hinders efforts to achieve the Millennium Development Goals, which were agreed at the international level,” states a press release by the UNDP, published in Brazzaville on the World Day of fight against corruption.

Cleaning up the procurement of government contracts and the Congo’s debt cancellation

Two bodies have been created by the Congolese government to fight against corruption. The National Commission for fight against corruption is responsible for investigations, including the implementation of the government’s policy in the fight against this scourge. The Congolese Observatory for the fight against corruption, meanwhile, monitors and evaluates the efforts made by the Government in this context.

The Congo has created legal basis for effective action against corruption, which did not exist before. The observatory then undertook a lot of work to determine the causes of this scourge in the country. Following this study, the government made a plan to fight against corruption, which was presented to the population thanks to the media. The Observatory has adopted the code of procurement of the state to clean up the procurement of government contracts, which served as a nest of corruption.

All these efforts are now bearing fruit. The country has the confidence of international donors. The Paris Club has confirmed the cancellation of 3,000 billion debt of the Congo. The amount represents the entire debt of the Congo towards creditors grouped in the Paris Club, since the country reached in January 2010 the completion point under the Initiative for Heavily Indebted Poor Countries ( HIPC).

This is a brief interim note to be followed by a detailed report later this month, but it contains our principal reasons why copper prices this year won‟t live up to the hopes of so many bulls. 

The year started with a bang; the US$ was weak, equity markets  were strong following encouraging data from the USA and copper prices rose to $9750, since pulling back. However, the financial sector remains fragile with substantial sovereign and private sector debt to be rolled over, many in the early months of this year. 

It has been the performance of China‟s economy which has driven global growth and, on its path, equity and commodity markets. China is now in that murky period of a leadership transition made even more complex than usual by an avowed wish to establish  a new economic model which would bring economic growth down to lower but sustainable levels. In the process, domestic consumption is seen as the future driver of economic activity with exports being given a lesser role. 

Such changes bring with them their own conflicts, conflicts between what Beijing sees as the future and what coastal governments have experienced as their principal source of growth. In the meantime, notwithstanding China‟s CPI data, which significantly understates real inflation, there are real concerns within the PBOC and others by the rising cost of living and input costs to manufacturing

Take 2010 for example.  The financial press is full of articles about gold being in a bubble which will surely burst, but the 27-30% rise over the year (depending on which statistics one takes) is small beer compared with a 90% rise in palladium and 80% in silver over the same period.  Copper too has seen a big rise, almost exactly matching that of gold, with a particularly sharp rise from mid-year, and since its price collapse in late 2008 the red metal has appreciated far more in percentage terms than its yellow counterpart – see the following graphic plotting the advances in prices for copper, palladium and gold over the past two years – as you will see the copper and palladium prices have both shown far steeper increases than gold.  So which, if any of these metals is more likely to be in a bubble?

To an extent it all comes down to timing.  If one charts the same metals over a longer or shorter period the percentage increases delineated will be considerably different.  For example here’s a 5-year plot which shows considerable volatility in the copper and palladium prices.   (If one adds silver into the mix for both the 2-year and 5-year graphics the plot is remarkably close to, and virtually overlies, that of palladium so for visual clarity it has been left out).

Does this mean copper and palladium have already been in a burst bubble from which they are recovering?  Surely all a question of semantics and statistical interpretation!

Perhaps the main difference in investor classification is that copper, palladium, and to an extent silver (very much borne out by its similarity in performance to palladium), are seen as industrial metals with supply/demand parameters much more dependent on global industrial growth than gold where investment demand (seen as more fickle by the bubble proponents) has a substantial impact.  Yet if one looks at the charts this ‘fickle’ investment demand has been consistently growing while the industrial commodities have suffered far more ups and downs – and sometimes very substantial ones.  So where does logic suggest that the long term smart money places its bets?  On performance over recent years it’s really no contest, although the traders may see better returns in moving in and out of the more volatile metals providing they get their calls right.

As for the industrially-oriented metals noted above, we are not suggesting that any price collapse is imminent, indeed they may continue their upwards path for some time yet as they are seen as being in a particularly tight supply/demand situation – but should China falter (and there seem to be signs that its exports may be slipping) – then things could turn around rapidly to a negative impact on prices and the volatile patterns seen over the past ten years could rear up again in terms of sharp price falls.

With gold the smart money is not betting on global growths, but against worldwide currency devaluation – not vis-a-vis other currencies but against a general long term loss of purchasing power in virtually all currencies.  That is what Quantitative Easing suggests and as long as major governments keep printing money and expanding the money supply gold’s long term path should remain upwards.  If governments stop pumping money into the economy to try and ward off recession/depression – something which does not seem imminent – then maybe that’s a time to revisit one’s gold investment policy, but for the meantime it would seem to remain the safer investment.

The metal touched a three and a half year high in Shanghai and climbed to a record in London and New York.

The wide spread optimism prevailing in the markets of a healthy recovery is acting as a magical potion.

Three-month contract on the London Metal Exchange gained 0.9 % to jump to an all-time high of $9,580 a metric ton and was seen trading at $9,565 a ton at 11:25 a.m. Singapore time.

The rise of copper is attributed to robust demand expected in the next year slated to begin Saturday. Mining companies are finding it difficult to cope with surge in demand and mine copper accordingly. Scarcity of quality ores also forms a problem.

435,000-ton global deficit in refined copper is estimated by International Copper Study Group for the coming year even as LME warehouses are experiencing a decline. The recent data shows a shrinking of 25 % of LME copper inventories this year.

In the biggest decrease since the week ending September 9, inventories in the Shanghai Futures Exchange also dipped 7,410 tons to reach 120,426 tons last week.

Chinese demand for copper is slated to rise as huge expansion plan in its power grids is in cards.

The current price rise of copper is however based on speculations and not much of delivery is taking place. But market fundamentals being strong, the recovery being healthy, demands are expected to be robust next year—experts contend.

March contract copper on the Comex climbed 0.8% to reach $4.396 a pound before being traded at $4.378, up 31 % this year. The high is the highest ever for a most-active contract.

Copper slated for delivery in April, on the Shanghai Futures Exchange inflated 0.4 % to 71,780 yuan ($10,864) a ton which on record is the highest price since May 2007.

Tin, LME’s best performer this year, rose to $27,500 a ton on Nov. 9 on supply constraints.

A La Nina weather event had taken toll on tin production in Indonesia, the biggest exporter and Australia. Blackouts in China also diminished tin output there.

Power cuts in China, the world’s largest producer, also curbed output.

Ban in mining in the Democratic Republic Congo, Africa’s largest producer of Copper has also been a production dampener.

Aluminum in London was down 0.2 % to reach $2,448 a ton while zinc was down 0.6 % to rest at $2,393.75 a ton.

Nickel toppled 0.7 % to $24,125 a ton, while lead jumped 0.3 % to $2,525 a ton.

As the year gets to a close, copper price jumped from London to Shanghai this week, touching an all-time high, on speculation that the red metal will be in huge demand from developed nations like the United States and most of the emerging countries.

Copper for three-month delivery advanced 2.1 percent to $9,257.50 a ton on the London Metal Exchange (LME). “The majority of LME’s stockpiles being held by one single company has created an artificially tight physical market,” Wang Ning, an analyst at Xiangyu Futures Co, said from Shanghai said.

On the Shanghai Futures Exchange, copper for March delivery closed 0.85 percent higher at 68,640 yuan ($10,283) a ton on Monday.

China is the largest marketplace for copper in the world. But improved economic conditions from large copper using nations like the US have turned many to believe that copper is going to be the top moving commodity for next year.

BMO Capital Markets has picked copper as the commodity of the year. In a recent survey, Barclays Capital said that copper will be the best performing commodity for the year 2011.

One of the main reasons for the copper boom is the shortage of production/supply and the booming demand for the red metal. BMO projects the 2011 copper deficit to be around 380,000 metric tons. Standard Bank says the copper deficit will be of 385,000 metric tons, widening to 562,000 in 2012. BNP Paribas looks for a supply deficit of 200,000 metric tons this year, widening to 500,000 in 2011.

With shortage outstripping demand, copper price is forecast to hit record in 2011.

According to Morgan Stanley, copper price will average of $7,900 a metric ton in 2011, up from $7,300 for 2010 although down from current levels.

Metals consultancy VM Group lists an average of $8,833 but a three-month target of $9,100 and a 12-month target of $8,500. VM Group looks for prices to top $10,000, but with volatility and potential for a correction if Chinese authorities are aggressive reining in money supply.

Goldman Sachs recently said in a research report that base metals such as copper are even closer to a “structural bull market” than oil because of supply issues. In the case of crude, declining inventories and rising prices may be followed by OPEC producing from spare capacity. But for many base metals, producers are already at full capacity and existing inventories are the only “spare,” Goldman said.

Dan Denning of The Daily Reckoning has this to say on copper market: “The copper move is terrifying and exhilarating. But what is it really telling you? Well the move from $1.25 a pound to over $4 a pound took place during the Bernanke reflation and the massive Chinese credit expansion via bank lending (another US$1 trillion this year, on top of last year’s $1 trillion). Copper’s strength is the US Dollar’s weakness, with a strong tail wind from Chinese fixed asset investment.”

Copper is the shining red metal in the global commodities space these days. And copper is going to glitter as an exchange traded fund (ETF). Result: Copper ETFs are all set to compete with Gold ETFs in the commodities world.

As base metals trading led by copper booms, the red metal has turned out to be hot favourite for investors, traders, manufacturers and commodity dealers around the world. And copper is going to get another investment edge thanks to the metal’s big ticket entry into the ETF world.

Remember that copper is getting into the ETF arena, backed by its physical strength, when the commodity price has surged to a record of 30-month high last week.

Currently, there are several Copper ETFs listed across exchanges in the United States. They include First Trust ISE Global Copper (NASDAQ: CU), Global X Copper Miners ETF (NYSEArca: COPX), iPath DJ-UBS Copper (NYSEArca: JJC).

Several ETFs backed by physical copper are hitting the global markets these days. Copper-backed ETFs have turned out to be the big commodities news recently as many analysts have predicted that they would become bigger than Gold ETFs. Gold ETFs are the biggest exchange traded funds in the world currently.

The front runner for launching Copper ETFs include JPMorgan, Deutsche Bank (NYSE: DB), iShares and ETF Securities. Recently, JPMorgan Chase (NYSE: JPM) traded a massive $1.5 billion in copper on the London Mercantile Exchange.

J P Morgan has already filed with the SEC an application for a physically backed ETF which, if fully taken up, would result in a holding of 61,800 tonnes of metal stored in the bank’s Henry Bath warehouses. JP Morgan’s ownership of Henry Bath warehouses was viewed as a key element in the launch of its fund as the cost for storing copper would be low.

When it comes to copper, it is not the physically-backed Copper ETFs alone that are going to make an impact in the commodities market. Copping mining ETFs are also doing wonderfully well among investors.

Copper mining ETFs like iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC, First Trust ISE Global Copper Index (NYSE: CU) and the Global X Copper Miners ETF (NYSE: COPX) have big potential investment opportunities.

Gorillas, the largest of the living primates, are ground-dwelling herbivores that inhabit the forests of Africa. Gorillas are divided into two species and (still under debate as of 2008) either four or five subspecies. The DNA of gorillas is 98%–99% identical to that of a human,[2] and they are the next closest living relatives to humans after the two chimpanzee species.
Gorillas live in tropical or subtropical forests. Although their range covers a small percentage of Africa, gorillas cover a wide range of elevations. The Mountain Gorilla inhabits the Albertine Rift montane cloud forests of the Virunga Volcanoes, ranging in altitude from 2225 to 4267 m (7300-14000 ft). Lowland Gorillas live in dense forests and lowland swamps and marshes as low as sea level.

We can organise the transport or you take your own transport;  

Nine officials were sacked at the weekend in a shake-up ordered by President Joseph Kabila, according to officials at the mines ministry and the office of the prime minister.

“The old management team lacked – despite many years – the initiative to increase production despite favourable prices of copper/cobalt, and (due to their) bad management of partnerships,” mines minister Martin Kabwelulu told Reuters by text message.

Ahmed Kalej, previously treasury director at the central bank, has replaced Callixte Mukasa as director of Gecamines, which mainly mines copper and cobalt in Katanga, Kabwelulu said.

Source Reuters

Government ministries, farmers, researchers, civil society organizations and the media will comprise the new FANRPAN Node in the DRC. These include the Ministry of Agriculture, Fisheries and Livestock, the Ministry of Natural Resources and Environment, the Ministry of Rural Development, two farmers’ organisations, The Agro Veterinarian High Institute (ISAV), Hope In Action, the Micah Challenge and the Congolese Human Rights House and the Center for Dialogue for Legal and Institutional Reforms [Centre d`Echanges pour des Reformes Juridiques et Institutionnelle (CERJI)], the last of which will serve as the interim hosting institution for FANRPAN in the DRC.

Dr Lindiwe Majele Sibanda, Chief Executive of FANRPAN, says:
“FANRPAN was set up to create a food-secure Africa which can feed itself. To do this, success stories must be understood and scaled up. The DRC, as FANRPAN’s newest National Node, will be vital in FANRPAN’s continued success to create conducive policy environments for Africa’s farmers.”

Charles Mushizi, Coordinator of CERJI and Head of the FANRPAN node in DRC says:
“The DRC is committed to promoting research and evidence-based policies in a number of spheres, and investing in home grown research capacity and research solutions that will meet the specific needs of the country and Africa at large.”

An initial stakeholder workshop took place in Kinshasa, DRC from 5-6 May 2010. FANRPAN’s engagement with the DRC began as early as 2007 at the Lusaka FANRPAN Regional Annual Policy Dialogue and at the 2009 Maputo Annual Policy Dialogue.

Since 1960, agricultural production in the DRC has been declining. More than 68 per cent of the Congolese population is fed by small-scale farmers. Over 90 per cent of the 2.34 million sq km of land in the DRC is arable, an area second in the world only to Brazil in it size. Yet farmers are slow to make use of improved varieties and agricultural inputs, and their crops still suffer extensive damage caused by insects and disease. Also, only 10 per cent of agricultural land is developed and yields per hectare are low. As a result, food insecurity in 2009 still affected more than 70 per cent of the population.

Congo is now mulling changes in taxes levied on exports of semi processed copper and cobalt after appeals from business community which says illegal taxes are crippling sectors across the board.

Mining ventures owned by Freeport McMoRan, First Quantum, ENRC and several others have been paying millions of dollars to cover the new $60 per tonne tax introduced in April on unfinished copper and cobalt to encourage miners to add value to Congo’s resources in country and export finished products.

Mining companies complained that many in the market require semi-finished products rather than finished products and that attempts to invest in Congo’s value chain were hampered by 2 year mining contracts review as well as the world economic crisis.

The Katanga Province hosts the Central African Copperbelt, which extends from Angola through the DRC into Zambia. The Copperbelt is one of the world’s greatest metallogenic provinces containing 34% of the world’s cobalt reserves and over 10% of the world’s copper reserves.

Copper declined on concern China’s property market may slump further, reducing demand for the metal, after banks were ordered to conduct more stress tests to gauge the effect of a price drop of as much as 60 percent.

The metal for three-month delivery fell as much as 1 percent to $7,430 a metric ton on the London Metal Exchange, and traded at $7,441 in Shanghai.