ON THE ROCKS

Joseph Kabila’s government, which has for years accepted extremely low royalties from mining companies, now risks antagonising the industry with a new mining law

Mining companies have had a rough start to the year in the Democratic Republic of Congo (DRC). President Joseph Kabila is about to sign a new mining code into law, which the industry is in something of a panic about.

On the books since 2012, the revised mining code was finally wrapped up by parliament in late January. It is set to introduce major fiscal and regulatory reforms, including the repeal of a measure established by the 2002 law that exempted licence holders from complying with changes to the fiscal and customs regime for 10 years.

This means companies such as

Glencore and Randgold will have to pay higher royalties.

The reforms come amid a boom in the price of cobalt, a key element in the lithiumion batteries used in electric vehicles. In the past 12 months, cobalt prices have doubled as automobile companies have rushed to secure supply. The DRC has half of the world’s cobalt reserves.

Naturally, mining companies are furious. After five years of on-off negotiations, the DRC’S biggest investors are faced with what they consider the worst possible outcome.

Last month, they formed a new club in an attempt to stop the legal reforms from going ahead. In a letter to Kabila, they demanded that the newly created group replace the Chamber of Mines, claiming the chamber is “unable to satisfactorily consolidate and communicate our wishes during the revisitation of the mining code”.

This is hardly surprising. The Chamber of Mines is a subcommittee of the Fédération des Entreprises du Congo headed by Albert Yuma, who is also the chairman of stateowned mining company Gécamines SA and one of the driving forces behind the reform of the mining law.

Yuma has made no secret of his intention to retake control of the mining sector, recently floating the idea of nationalising the DRC’S mines. He has verbally attacked foreign-owned mining companies operating in the country, accusing them of “stealing money from Gécamines for many years”.

At the Mining Indaba in Cape Town last month, Yuma’s feud with company CEOS was on full display. No-one minced their words.

“Yuma is the guy who’s championed this process,” Bloomberg quoted Randgold CEO Mark Bristow as saying. “He’s the CEO of a bust organisation, with all sorts of accusations levelled at him, and he’s

What it means: Mining companies will need to renegotiate contracts under the new law, which could push taxes on ‘strategic substances’ from 2% to 10%