The blow struck by Katangan rebels at Zaire's economic jugular - mineral rich Shaba province - spells certain financial disaster for the country as well as supply disruptions for world copper and cobalt markets, according to U. S. government and financial sources.
Reports from the battle area, confirmed by the grim and weary refugees arriving in Brussels over the weekend, said the guerrillas' sabotage combined with power failures halted the mines' water pumps, leading to widespread flooding.
Analysts agreed that it would take from six months to a few years to resume operations at the mines, which provide 60 percent of Zaire's foreign exchange earnings each year.
The flight of the European engineers and technicians who manage the operations and the perennial shortage of African white collar workers could keep the mines out of commission even longer, the analysts said.
Kolwezi, the center of the country's mining activity, is home to five of the six open-pit mines of the state-owned Gecamines Co. and to the largest underground copper mine, Kamato.
More than 75 percent of the approximately 425,000 short tons of copper produced in Zaire annually as well as 90 percent of its cobalt either originates in Kolwezi district or is refined there. All of the nation's zinc and cadmium is produced at the Metalkat factory there as well.
Sixty-five percent of the West's cobalt - a strategic metal used in heat-resisting alloys and nuclear medicine - is produced by Zaire.
International Monetary Fund statistics show that Zaire's exports totaled $603.07 million in 1976, with copper leading the list at $255.42 million. Coffee is its second major commodity export, followed by cobalt and diamonds.
A diplomat in Lusaka, Zambia, told newsmen that the rebels had inflicted more damage on President Mobuto Sese Seko's government by holding Kolwezi for a week than if they had carried out a lengthy guerrilla campaign.
The long-depressed world copper market, however, stands to benefit from the shutdown of Zaire's output. Copper prices peaked at $1.45 a pound in May 1974 but drifted persistently lower to 58.20 cents a pound on the July contract traded on New York's Commodity Exchange Inc. on May 12.
As Richard Gripenberg of Mocatta Metals Corp. in New York explained, Zaire's absence from the copper market could wipe out the one-million-ton or so world surplus in about 18 months, boosting prices substantially in the process. Since the Kolwezi battle began, the July contract on the Comex has risen to more than 62 cents, he said.
The hefty world reserves and inventory holdings have depressed that market, leading U.S. companies such as Kennecott Copper Corp., Anaconda Mining Co. and others to furlough workers and reduce output. Western Canadian operations likewise have been curtailed.
The impact of those actions has been blunted by continued full-steam-ahead production by Third World producing nations such as Peru, Chile and Zambia, which depend on copper exports for sorely needed foreign exchange.
Although there is no shortage of cobalt currently, the drama being played out in Kolwezi district is likely to result in a critical shortage, analysts said.
Some observers downplayed the effects of the terrorism on the metals markets. Among them was Jay Cooke, senior research analyst at Bache Halsey Stuart Model Shields in New York.
"No matter who wins, they're going to export copper," he said. "If Mobuto wins, he'll clean up the mines and try to lure the Belgains back to run the operations. If the terrorists win, they'll pump them out and may be able to use Cuban and Soviet technicians. What we've got is a short-term supply distruption and a short-term production disruption."
But Mocatta's Gripenberg and the company's chairman, Dr. Henry Jarecki, led the majority who disagreed with Cooke.
"The country's production will be at a standstill until they can recruit a lot of courageous bachelor engineers who would be willing to put their lives on the line in a black nation," Gripenberg said. "The outlook is bleak, to say the least."
An analyst at J. Caron & Co., one of the largest metals trade houses in New York, said no major copper or cobalt contract is outstanding that would appear to be unfilled because of the Zaire battle. "We'll see a dislocation of certain qualities of copper refined in Belgium," he said. "Those companies needing concentrate and some inferior grades of cathodes will be looking on the world market soon, but not for much of anything else."