UPDATE 1-IMF sees rapid growth in Congo minerals output

(Adds background, future negotiations)

By Joe Bavier

KINSHASA, June 7 (Reuters) - Democratic Republic of Congo's copper and cobalt production should rise rapidly in the coming years as it reaps the benefit of private investment in its mining sector, the International Monetary Fund said on Thursday.

Following the first free elections in four decades last year and a return of stability to the southeastern Katanga province, the central African country's mineral heartland, investment by major mining companies has boomed over the past few years.

Mineral production -- which also includes gold and diamonds -- will rise as projects to rehabilitate long-abandoned mines and open new ones begin to go online early next year, Cyrille Briancon, head of the IMF's Africa division, said in Kinshasa.

"Beginning in early 2008, Congo should see growth in production if these projects advance as planned, and it should continue to grow fairly quickly through 2012 and 2013," he said.

"We should reach levels that this country has not seen for a very long time."

Once a world leader in mineral production, Congo exported more than 440,000 tonnes of copper in 1989 before a steady decline due to years of mismanagement followed by a 1998-2003 war crippled exports.

Companies operating or prospecting in Congo's fast-expanding mining sector include the world's largest diversified miner BHP Billiton (BHP.AX) and the world's third-biggest gold producer AngloGold (ANGJ.J) Ashanti.

U.S. major Phelps Dodge, recently purchased by Freeport-McMoRan Copper & Gold Inc (FCX.N), is investing $650 million in its Tenke Fungureme project in Katanga.

London-listed Nikanor Plc NKR.L plans to bring $1.3 billion in outside investment.

POST-ELECTION PROGRESS

Briancon said the IMF was encouraged by progress made by Congo's government, appointed in February, towards reining in spending and increasing revenues.

"The tendencies over the past three months have been relatively good," he said.

A much-delayed 2007 budget, aimed at qualifying Congo for debt relief next year, was presented to parliament last month for approval.

The cash-strapped but potentially mineral-rich central African nation owes some $10 billion, and servicing external debt will consume more than half of the 2007 budget.