JOHANNESBURG - Heightened tension in Central Africa brought on by fighting in eastern Zaire was unlikely to affect production of Zaire's main mineral exports, copper and cobalt, analysts said on Friday.

Although production of copper and cobalt has slumped since the 1980s, Zaire is still seen as an unexplored mineral treasure house with vast mineral resources making it potentially one of the richest resource areas in the world.

Mining and metals analysts said the fighting in Zaire's eastern refugee zone between Zairean troops and ethnic Tutsi Banyamulenge rebels was far removed from the main copper and cobalt areas in the southern copperbelt in Shaba province. "Zaire has to all intents and purposes broken up some time ago into separate provinces and the copper province, Shaba, is pretty much isolated from what is going on in the rest of the country," said Johannesburg investment analyst John Clemmow.

Clemmow and other analysts said Shaba province - the base of state-owned mining company Gecamines - was virtually independent and out of Kinshasa's control. "Shaba is quasi-independent already. It is a localized operation which is beyond the rule of Kinshasa. These things (fighting) don't really affect it," Clemmow added.

Half a million Rwandan and Burundian refugees and tens of thousands of Zaireans are fleeing the fighting in Eastern Zaire. Zaire has a large proportion of the world's cobalt reserves, about 28 percent, and the country's copper reserves are the sixth-largest in the world. Most of the copper and cobalt reserves are in Shaba province.

The country is also the world's third-largest producer of rough diamonds after Australia and the former Soviet Union.

Angus Macmillan, research manager at London-based Billiton Metals Ltd., said although copper production dropped from around 500,000 tonnes in the 1980s to around 35,000 tonnes last year, the country still held vast mineral resources and potential. ``It has got huge potential as a mining area,'' Macmillan said. Last year, Zaire produced about 16 percent of the world's cobalt demand which stood at 24,000 tonnes.

A London-based metals analyst, who asked not to be named, said the conflict in the Central African country had not had any impact on the copper and cobalt market yet. "Cobalt traders have been talking about it but clearly it is not causing concern in the market," the analyst said.

Analysts said they expected Zaire's mineral output to increase in the future. Clemmow said several projects were under development in Zaire which would boost production.

"We've seen the start of a mass privatization programme in Zaire which has seen Gecamines starting to sell off stakes in some of its assets.

"There has been substantial investor interest in this. The stock market has taken a very favourable view of companies that are invested in Zaire," he said.

Two of the projects were the development of the giant Tenke Fungurume copper deposit and the Kolwezi tailings mine. Projected cobalt output at Kolwezi would be around 6,000 tonnes a year - a quarter of world cobalt demand.

"These are the highest grade ore bodies in the world and at some stage they would be brought back into production and that stage looks much closer the way things are going," Clemmow said.

Reproduced and distributed with written permission from the Reuters News Service.

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