Congo mines say revised code threatens industry's future

DAKAR, Dec 11 (Reuters) – Mining companies in Democratic Republic of Congo said on Monday that proposed changes to the mining code adopted by the lower house of parliament last week would do lasting damage to investment in Africa's top copper producer.

The process of revising the 2002 mining code in Congo has dragged on for over five years but the National Assembly on Friday approved a bill that would increase taxes and royalties and sent it to the upper house Senate for a second vote.

The measure would also increase the state's minimum unpaid share of new mining projects and require that Congolese investors hold at least 10 percent of shares in large-scale mines.

In a statement, several of Congo's largest copper and gold mines, including projects operated by Swiss-based commodities giant Glencore and London-listed Randgold Resources , said investors would look elsewhere if the code were approved by the Senate and signed into law by the president.

"This very heart of the DRC's economy is now seriously threatened while it should be protected, supervised and strengthened," the statement said.

"This would cause the certain death of a young industry, however it contributes to the achievements of the national economy."

The government and some civil society groups in Congo dispute the companies' financial models and argue that the proposed 3.5 percent royalties on precious and base metals are lower than in competitor nations such as neighbouring Zambia.

Congo's mines minister suspended consideration of the revised code in March 2016 because companies had complained that its fiscal terms would make their projects unprofitable, given current low commodity prices.

But the government reintroduced the proposal in May, saying it was essential to boosting public revenues in a country with an annual budget of only around $5 billion.

Congo's mining sector accounts for some 95 percent of the country's export revenues and represents about 20 percent of national gross domestic product.

(Reporting By Aaron Ross; Editing by Gareth Jones)