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Congo seeks more from her minerals; companies up in arms

 

For so many years, the people of the mineral endowed Republic of Congo have demanded reforms in the country’s mining code. Similar to existent laws in a number of mineral rich countries in Africa, the 2002 Congo code offered laxities for purposes of attracting investors at a time when the country was faced with high levels of insecurity.

A decade and six years down the road, the 2002 Congo code remains to the benefit of mining companies in a country that holds some of the world’s largest deposits of copper and cobalt with potential to sprout to development through its mineral sector. The country is home to the world’s largest known cobalt deposit (Katanga copper belt). However, despite the high levels of production, government revenue from mining and the benefits to the locals have for long been on the low.

It is against this background that the government after holding several consultative meetings since 2012 when the code was first revisited, revised the 2002 Congo code to enable the country and the people earn more from the country’s natural resources. In December 2017, the parliament of Congo, without opposition passed the new mining code which currently awaits the President’s signature to progress into law.

Among the revisions to the code are; the increase in royalties on base minerals like copper and cobalt from 2% to 3.5% and 5% royalty on strategic metals. The revised Congo code will also impose a 50% tax on super profits made by companies. These adjustments to the 2002 Congo code will see the government and the local communities earning more from the country’s natural resources.

However, these adjustments have not downed well on the international mining companies in the country. Many of whom have organized themselves to challenge the reduced generosity of the government towards companies as penned in the new mining code.

Companies React

With combined effort, the international companies currently operating in Democratic Republic of Congo are campaigning against the new mining code which according to them will make investment almost impossible because of higher royalties.

Randgold, China Molybdeum Co. Glencore and Ivanhoe are among the companies working in Congo and worried about the new mining Code. The country is signatory to the OHADA Treaty. OHADA stands for Organization for Harmonization of Business Law in Africa. The purpose of the treaty is to improve the business climate of the countries that have implemented it. The Treaty also provides companies doing business in DRC with a single, modern, flexible and more reliable business law framework.

It is because of such laws that the international mining companies are considering it illegal for the government to ignore previous laws in revision of the 2002 Congo code. Some companies are simply uncertain of whether the increased royalties will actually benefit the people of Congo or simply be to the benefit of a few.

Randgold which gets 45 percent of its gold from DRC has risen up against the new mining code which is alleged to take everything from the investors and leave them with minimal returns on investment which will drive investors out of the country.

 

The old mining laws

In many African countries, outdated mining laws are still being used to govern the mineral sector. It is because of this that despite being endowed with natural resources, many African countries are not making the most out of their mineral wealth. Investors tend to take the lions share.

The Democratic Republic of Congo, despite having the largest known deposits of copper and cobalt which is used to make rechargeable batteries used in electric vehicles, remains underdeveloped with the government earning very little from this mineral wealth basically because of the country’s old mining laws.

This is not any different with some of her neighbors. Uganda still operates under the 2001 mineral policy with the amendments to it remaining a shelved draft awaiting the president’s signature.

 At the peak of natural resource exploitation in Africa, countries ought to revise mining laws to ensure that the government and citizens benefit from the country’s natural resources with emphasis on local content.

Acomai Isabella

The Author is the Communications Officer ,

Africa Centre for Energy and Mineral Policy (ACEMP)

isabella.acomaiThis email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

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Friday, 22 February 2019
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