DRC’s draft mining regulations appear to ignore companies’ worries

The mines ministry of the Democratic Republic of Congo said it is completing work on new mining regulations, as a draft document showed the government has so far ignored companies’ key concerns about the reforms.

Miners including Glencore and Randgold Resources have demanded the government dial back aspects of the legislation approved by President Joseph Kabila in March 2018.

The ministry makes no mention of any of the major changes the companies seek, according to a draft document seen by Bloomberg. It was verified by a member of the commission charged with revising the mining code and by a mining company manager. The document was circulated to mining companies on May 3.

“We are in the process of working so that there is a draft which must be examined by the government,” Valery Mukasa, chief of staff to Mines Minister Martin Kabwelulu, said from the capital, Kinshasa. “We are first finishing the work and at that moment we will communicate on the whole text.”

Miners argue the new code will drive investors away because it breaches titleholders’ rights, increases royalty payments on copper, cobalt and gold, and introduces new taxes.

Two days before Kabila promulgated the code, mining executives met with him, and he declined to amend the law but indicated the drafting of the regulations that implement the legislation might alleviate the companies’ concerns.

The mines ministry is required to submit a final version of the regulations to the cabinet within 90 days of the president signing the code.

Without major concessions in the remaining month, mines could immediately be liable to pay the higher royalties and the new taxes.

Seven mining companies, submitted a proposal to the mines ministry at the end of March that insisted the government reinsert a stability clause contained in the 2002 code, which protected licence holders from complying with changes to the fiscal and customs regime for 10 years. The miners also asked the government to remove a 50% tax on superprofits and a new categorisation of “strategic substances,” which have a 10% royalty rate.

The prime minister will be able to designate certain minerals as “strategic” via decree, according to the document. Kabwelulu told parliament in January cobalt could become a “strategic” metal.