* Region's copper sector set for rebirth
* Africa Copper Belt forecast to produce 1.25 mln T in 2014
* Infrastructure woeful, political risks high
By Ed Stoddard and Chris Mfula
JOHANNESBURG/LUSAKA, Oct 3 (Reuters) - In August, the South African rock band Watershed flew up to southern Congo in a corporate jet to play at a private function put on by a foreign company running a copper mine in the area.
"It was really well organized, we just flew up and played and then flew back. But the place was poor and desolate," Watershed lead singer Craig Hinds told Reuters in an interview.
As it was a private function, Hinds did not want to disclose the name of the miner. But the episode is telling.
Just a few years ago, it would have been unthinkable for a foreign band to fly to a remote part of Congo, better known for graft, war and disease, to play a corporate gig.
But the times are changing and money is flowing at a torrid pace into the vast strip of copper that straddles Democratic Republic of Congo and neighbouring Zambia.
As a result, the mines on both sides of the border are being redeveloped after decades of neglect and ruinous policies.
"Both countries' output fell to very low levels through lack of investment and low prices, but it is picking up from that low base," said Robin Bhar, an analyst with Credit Agricole in London.
Investors still face a host of issues including a new nationalist president in Zambia and woeful infrastructure .
Still, investment into Africa's Copper Belt over the next few years should reach billions of dollars and push it into the production big leagues of a metal crucial for global industry.
Despite recent setbacks -- copper's price is down some 25 percent so far this year -- the long-term outlook for the benchmark industrial metal is bullish, driven by demand from Asia and other emerging countries and regions.
Zambia's Chamber of Mines reckons the country can roughly double copper output to 1.5 million tonnes per year by 2016. Other forecasts are more modest though still buoyant.
According to Reuters' Metal Production Database (http://bond.views.session.rservices.com/mpd/), Zambia will produce around 1.3 million tonnes of copper from mine and leach operations by 2014. At that stage it could be the world's fifth-largest producer of copper concentrates.
With Congo's output from mining and leaching forecast to reach around half a million tonnes by 2014 from around 300,000 tonnes in 2010, Africa's Copper Belt could be producing around 1.8 million tonnes before the middle of the decade.
It is a far cry from the 1980s and 1990s when copper output from Zambia's nationalised mines limped along at around 250,000 tonnes a year from a peak of 750,000 tonnes in the early 1970s.
Heavyweights like Brazil's Vale , China's Jinchuan and Swiss-based commodities trader Glencore have all been drawn to the region's rich copper resources.
Vale, the world's biggest iron ore producer, found itself outbid by Jinchuan, China's dominant nickel producer, in the scuffle for Metorex , a medium-sized South Africa-listed mining firm that digs for copper and cobalt in Zambia and Congo. Jinchuan won with a ${esc.dollar}1.3 billion bid.
But while the rewards could be high the risks and obstacles on Africa's Copper Belt remain daunting.
INFRASTRUCTURE
Any analyst who talks about the Congo side of the Copper Belt -- the southern province of Katanga and the mining town of Lubumbashi -- raises one key issue: infrastructure, or its absence.
It is one thing to haul up a rock band for a gig; it is another to haul massive amounts of copper out of the ground, and then to transport it out of the country.
"The trend does look promising but there are hurdles to growing output, especially infrastructure," said Bhar.
The country's infrastructure was left to rot under the corrupt and brutal rule of Mobutu Sese Seko, who named it Zaire and was in office for over three decades before being deposed in 1997.
Lara Smith, managing director of Johannesburg-based Core Consultants, which has done extensive research on the issue, said the road and rail networks were a shambles.
"The railways are shocking and that can cause derailments," she said, adding that trains on the Congo side typically crawl at 15 kms (10 miles) per hour.
Chinese companies have been rebuilding some of the rail lines but critics have said some of this work has been shoddy, with crooked lines ripe for an accident.
Power is a perennial problem. Zambia has been hit by electricity shortages, with peak demand of 1,580 MW against available generation of 1,401 MW.
The country has started rationing electricity for domestic users during peak hours but industry experts say this could spread to the mines soon.
Still, improvements are being made. Smith notes that a road border crossing that opened on the Zambian side earlier this year has greatly lessened queues going into Congo.
POLITICAL RISK
Political risk is another huge factor, especially given the two countries' respective histories. Zambia nationalised its mines in the 1970s while Congo sank under Mobutu.
The key worry is stability and security of ownership.
First Quantum was left badly burnt after Congo's "revisitation", a review of licenses held by some 60 miners, which led to the Canadian group's assets in the country being confiscated with the loss of ${esc.dollar}1.1 billion invested and billions more in future potential revenue.
First Quantum, the only miner to have its licenses revoked, is pursuing its cause in international courts, though it has little hope of achieving more than financial compensation.
Investors are clearly jittery about new Zambian president Michael Sata. First Quantum, which is heavily invested in the country, has seen its share price fall more than 15 percent since election results began to trickle out, underperforming the drop in the copper price over the same period.
First Quantum plans to spend at least ${esc.dollar}2 billion over the next three to five years as it aims to lift output at its Kansanshi mine in Zambia from about 230,000 tonnes of copper in 2010 to about 400,000 tonnes a year by the end of 2014.
Analysts say Sata, nicked-named "King Cobra", is likely to back away from shaking up the nation's copper industry significantly, despite his past attacks on foreign mining investment, especially Chinese.
Across the border, gold-producing eastern Congo has been the scene of war and violence for years and analysts say investors will not want to have their products lumped, in the eyes of campaigners, with so-called "conflict minerals."
"Any company that wants to invest in the DRC will want to make sure its product is not tainted with the conflict mineral brush," said Bhar.
The southern Katanga province, home to much of Congo's copper and cobalt, has been relatively stable under governor Moise Katumbi, but he is set to leave office next year.
And even in Katanga, the threat of lawlessness isn't ever far away. Nearly 1,000 inmates escaped from a high security prison in Lubumbashi in early September after gunmen attacked it to free a jailed rebel leader. (Editing by Alison Birrane)
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