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Activists urge Congo government to pass new mining code

Photo shows Katanga Mining unit (Image courtesy of Katanga Mining)

Activists in the Democratic Republic of Congo are pressing the government to revive plans for a new mining code, claiming the country, which is Africa’s top copper producer and the world’s largest source of cobalt, needs the higher revenues a revised legislation would generate.

Congo began reviewing the 2002 mining code in 2012 and last year it proposed hiking profit taxes to 35% from 30%, raising the state’s free share of new mining projects to 10% from 5% and royalties on copper and cobalt revenue to 3.5% from 2%.

Congo began reviewing its mining code in 2012, aiming to increase state revenues and tighten environmental and social regulations.

In February, however, authorities dropped the planned changes as the move could have driven away investors at a time of historically low commodity prices and energy shortages that were driving down output in the country.

The chamber of mines, an industry lobby group, welcomed the decision at the time. The association had opposed revisions to the code because of the potential negative impact it could have on investment in mining.

Randgold Resources (LON:RRS) chief executive officer, Mark Bristow, even said last year that the planned changes risked destroying the industry in Congo.

But in a report released Thursday, anti-genocide campaign group ENOUGH Project, echoed other non-governmental organizations request by asking the government to complete the mining code review.

“The United States, the African Development Bank, European states, and the World Bank should strengthen Extractive Industries Transparency Initiative (EITI) implementation in Congo by pressing for EITI reports to disclose the expenditures of state-owned companies, as required by EITI, pushing for full beneficial ownership disclosure, particularly for partners of state-owned companies, and following up on contract transparency,” the document, which analyzes Congo’s political economy over the past 130 years, reads.

“Also, the United States, European Union, World Bank, African Development Bank, and mining companies investing in Congo should urge the Congolese government to complete the Mining Code review with the full participation of civil society,” it adds.

Low copper prices have affected the country’s economy and driven some companies, such as Glencore (LON:GLEN), to suspend operations. As a result, copper production in DRC fell by 3% to 995,805 metric tons in 2015, the first drop in six years.