Ivanhoe boss said he’d pay higher taxes in Congo if it benefits locals
Canadian billionaire Robert Friedland, founder and executive chairman of Ivanhoe Mines (TSX:IVN), has joined the debate over the Democratic Republic of Congo’s imminent hike to mining taxes by saying his company would pay higher royalties and taxes, but only if that money benefits locals.
The Vancouver-based company, which is developing the Kamoa-Kakula copper deposit in the Central African nation in partnership with China's Zijin Mining, told investors attending a mining conference in Cape Town that he was not opposed to updating the country’s 16-year-old mining code.
However, he said the mining industry needed stability, transparency and prove the new taxes collected by Congo goes to “develop, help and empower local people.”
Founder Robert Friedland said he didn’t mind paying a higher royalty as long as it goes to develop, help and empower local people.
“I’m not concerned about the level of taxation, that’s not the fundamental issue,” he said according to FT.com. “The issue is the mining industry needs stability and we absolutely need transparency.”
Ivanhoe is also building a new operation at Kipushi, a past producing zinc-copper mine in partnership with Congo's state-owned Gécamines. The company's most advanced project, however, is Platreef platinum, located in South Africa.
The revised mining code, approved by the country’s parliament last week, would increase copper royalties from 2% to 3.5%, creating also a 50% "super-profits" tax if commodity prices rise much faster than expected.
But what really has miners up in arms against the new rules is a move to eliminate a clause that would have protected resources companies present in the country from tax increases for 10 years.
While the legislation has yet to be signed into law by President Joseph Kabila, some such as Congo’s state-owned miner, Gécamines, are already seeking to take advantage of the new rules.
Last week, the miner said it would revise all contracts with its international partners, claiming the old rules meant those firms benefitted more from the country’s riches than Gécamines itself.
Revisions should to start in the second quarter and be completed by the end of this year or beginning of 2019, it said.
Other international mining companies operating in Congo include Glencore, Randgold Resources, China Molybdenum, Eurasian Resources Group, and MMG. All of them have already seen their shares dive in the last week and said they will challenge the new law through international arbitration while they lobby Kabila not to sign it.
The nation is world’s main supplier of cobalt, a key component in the lithium-ion batteries that power electric cars and mobile phones, and Africa’s largest copper producer.