DRC’s new mining code is in force

MINERS operating in the Democratic Republic of Congo (DRC) would not secure substantial concessions in talks with the state about changes to the industry code, a senior mining official said.

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

The modifications will raise taxes and other costs for operators in the DRC, 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, the chairperson 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 on March 9, but assured miners that “their worries will be taken into account” in talks with the government.

Representatives of Glencore, Randgold, China Molybdenum, Ivanhoe Mines, MMG, Zijin Mining Group and AngloGold Ashanti attended the meeting.

The revised code removed a measure protecting mining licence 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 categorise the mineral as a “strategic substance”.

“The taxes and royalties to be paid have been fixed in the code by law,” said Yuma, who took part 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 DRC capital, Kinshasa, ahead of the talks with the mining ministry, according to a joint statement on March 15.

The ministry is required to produce regulations within 90 days of the law’s promulgation, which will dictate how the code is implemented.

The companies said Kabila assured the industry their questions would be resolved through “transitional arrangements” and the regulations.

The miners expect the negotiations “will give priority to the recognition” of the decade-long stability clause contained in previous legislation, which was adopted in 2002. This provision “formed the basis of many investment decisions” taken by the companies.

They also said they confirmed to Kabila “their willingness to negotiate additional royalties and changes to other taxes” during the talks.

Such wide-ranging were not up for discussion, according to Yuma.

“The mining regulations do not have the vocation or the power to modify the articles of the code,” he said.

After Kabila met the executives, Mines Minister Martin Kabwelulu told reporters that the government “will take the measures of the code and put them in the regulations” and that “the law cannot be contradicted”.

Kabwelulu didn’t immediately respond to a request for clarification about what issues will be on the table in the upcoming talks. His chief of staff, Valery Mukasa, declined to comment before the discussions have started. – Bloomberg