19 Mar

Congo Tamps Down Miners’ Expectations of Concessions on New Code

Miners operating in the Democratic Republic of Congo won’t secure substantial concessions in talks with the state about changes to the industry code, a senior mining official said.

Mining companies including Glencore Plc and Randgold Resources Ltd. are pressing the government to row back on some of the reforms President Joseph Kabila signed into law this month.

The modifications will raise taxes and other costs for operators in Congo, Africa’s top copper producer and the world’s main source of cobalt.

“There can be no renegotiation on any point once the code has been promulgated,” Albert Yuma, chairman of state-owned mining company Gecamines, said in an emailed response to questions on March 17.

Kabila met top executives from major foreign investors on March 7 to discuss their objections to the new law, which was approved by parliament in January.

The president signed the code March 9, but assured miners that “their worries will be taken into account” in talks with the government. Representatives of Glencore, Randgold, China Molybdenum Co., Ivanhoe Mines Ltd., MMG Ltd., Zijin Mining Group Co. and AngloGold Ashanti Ltd. attended the meeting.

The revised code removed a measure protecting mining-license holders from complying with changes to the fiscal and customs regime for 10 years. That means all mines face higher royalty payments and new taxes.

The new law also introduces a 50 percent tax on so-called super profits and hikes royalty rates on metals including copper, cobalt and gold. It also allows the government to raise royalty payments on cobalt five-fold to 10 percent if it opts to categorize the mineral as a “strategic substance.”

“The taxes and royalties to be paid have been fixed in the code by law,” said Yuma, who participated in the March 7 meeting. “No one can any longer change or remove them, or create new ones.”

The companies that met Kabila sent a team to the Congolese capital, Kinshasa, ahead of the talks with the Mining Ministry, according to a joint statement on March 15.