Congo government urged to pass new mining code

The sharpest drop in DRC’s 2015 copper production was during Q4, mainly due to the suspension of production at Glencore’s 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, needs the higher revenues the 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%.

However, the DRC dropped the planned changes last month as the move could have driven away investors at a time of historically low commodity prices and energy shortages that are driving down output in the country.

Difficult market conditions do not justify further delays, they claim.

The chamber of mines, an industry lobby group, welcomed the decision. 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 a group of 42 Congolese non-governmental organizations (NGOs) that have taken part in negotiations with the government and mining sector over the new code said on Thursday that difficult market conditions did not justify further delays, Reuters reports.

“Not doing it now is prolonging the bleeding of revenues in the sector which are needed to support our young democracy,” they said in a statement quoted by Reuters.

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.

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