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Africa Last Updated: Jun 15, 2019 - 1:18:34 PM

Commentators differ on impacts of DRC’s revised Mining Code
By Simone Liedtke, Mining Weekly, 12th June 2019
Jun 14, 2019 - 9:09:48 AM

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Ivanhoe Mines Democratic Republic of Congo (DRC) operations MD Louis Watum says the country’s new Mining Code has created uncertainty regarding the regulatory framework within the country, which has negatively impacted on funding in the DRC’s mining industry.

The revised Mining Code seeks to benefit all stakeholders in terms of social, environmental and economic upliftment, but has also resulted in higher taxes and royalties on speciality minerals, including cobalt and coltan.

In this respect, Watum explained during a webinar on Wednesday that legal and fiscal stability had played the most significant role in the ever-growing trust that international investors had shown in the DRC, to date, by deploying investment capital in mining projects.

He lamented that the revised Mining Code had “a direct consequence of limiting the growth of the mining industry in the DRC” and said that it hampered the medium- to long-term growth prospects of the country.

Despite Chinese investment flocking to the Central African country, Watum pointed out that, with the revised Mining Code at play, the DRC was impacted on by the cost of “lost opportunities” for international mining companies that wanted to invest in the country but could not owing to the regulatory uncertainty.

Because of this, Watum said Ivanhoe Mines and other mining companies operating in the DRC had established a forum through which they collectively engage as good corporate citizens with the various ministries of government regarding the Mining Code, as well as the means to achieve short- and broader long-term objectives.

“Collectively, we share a determination to develop a strong partnership between international mining companies and the government of the DRC,” he said, adding that the forum believes “this is a time of historic opportunity for the responsible development of the mining sector in this country”.

Ivanhoe Mines has, so far, invested nearly $1.4-billion in the DRC through its Kamoa-Kakula and Kipushi projects.

Neither is all doom and gloom as far as other stakeholders are concerned, with South African Capital Equipment Export Council (Saceec) CEO Eric Bruggeman saying the council had “found it very beneficial” to do business in the DRC.

Apart from experiencing a few challenges surrounding documentation, border control and transportation costs into and from the DRC, Bruggeman added that Saceec members, in particular, were “really enjoying doing business in the DRC”.

According to him, the DRC – despite its challenges and uncertainties – remained a big market.

From a South African perspective, he added that the key to sailing through these rough waters would be to form partnerships between local people in the DRC and local South African manufacturers.

Generally, however, Bruggeman stated that doing business in the DRC had been found to be “very easy” and he encouraged international mining companies to do business in the African country.

He highlighted that it was important for international players to focus on upskilling and training people in the DRC, while forming partnerships with local businesses that would make “it easier to do business” in the country.

Moreover, touching on whether he believes the changes to the DRC’s Mining Code had had a direct effect on the country’s mining sector, EMW & Associates partner Edmund Cibamba said that, for the time being, the changes had “not affected investment in the country”.

This can, however, change at any given time moving forward, particularly considering the uncertainties surrounding the new Mining Code.

The DRC mining code revision process, which started in 2012, had led to a Bill that was approved on January 27, 2018.

Some of the key changes to the Mining Code would include exploitation licences being reduced from 30 to 25 years; exploration licences being renewable only once; an increase in the State free-carry nondilutable equity stake from 5% to 10%, increasing by 5% on each renewal of a mining licence thereafter; and a 10% share capital stake to be held by Congolese private citizens for creating a mining company.

Additionally, the revised Mining Code has extended tax benefits to mining companies’ subcontractors, but only if they are controlled by Congolese shareholders, and it has increased tax and customs burden, while royalties increased from 2% to 3.5% for nonferrous and base metals and from 2.5 to 3.5% for precious metals calculated on the gross market value of the products.

Source:Ocnus.net 2019

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