Mining Industry Submits Code Proposal to DRC Government
Among other things, it proposes linking a sliding scale of royalty rates to the prices of the key commodities, which industry representatives believe would be a more effective mechanism than the windfall tax introduced in the new code and at current prices would immediately give the government a higher share of revenues than what is provided in the new code. It also deals with stability arrangements, state guarantees and mining conventions.
Along with the stability afforded to convention holders, enshrined in the 2002 mining code is a 10-year stability clause which provides that the holders of mining and exploration titles will continue to be governed by the terms of the 2002 mining code for such period in the event of the implementation of any new law.
This is the result of mid-March meeting convened in Kinshasa after DRC President Joseph Kabila revised the mining code raising royalties on minerals and removing the stability clause, which resulted in more than $10 billion in direct investments by the mining industry. Specifically, Article 276 states:
“The State guarantees that the provisions of the present Code can only be modified if, and only if, this Code itself is the subject of a legislative amendment adopted by Parliament. The rights attached to or deriving from an exploration licence or mining exploitation licence granted and valid on the date of the enactment of such a legislative modification, as well as the rights relating to or deriving from the exploitation licence subsequently granted by virtue of such an exploration licence, including among others, the tax, customs and exchange regimes set forth in this Code, remain acquired and inviolable for a tenyear period from the date of: a) the entry into force of the legislative modification for the valid exploitation licences existing as of that date; b) the granting of the exploitation licence subsequently granted by virtue of a valid exploration licence existing on the date of entry into force of the legislative modification.”
The new proposal accepts 76% of the articles in the 2018 code and suggests changes to the rest only to ensure the effectiveness and legality of the code. The mining industry representatives believe these changes will resolve issues with the code and contractual relationships while giving the DRC and its people increased participation in the proceeds of mining.
At the beginning of March, Randgold Resources’ and AngloGold Ashanti’s Kibali mine, Glencore’s Mutanda mine and Kamoto Copper Co., the Kamoa-Kakula mine, MMG’s Kinsevere mine and CMOC’s Tenke Fungurume mine resigned from the Federation des Entreprises du Congo (FEC), the Congolese Chamber of Commerce. These mines, which represent more than 85% of the DRC’s copper, cobalt and gold production, said the FEC does not adequately represent their interests.