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Congo to discuss mining code changes with companies

The Democratic Republic of Congo’s intentions to increase the government stake in mining projects by 35% will first be discussed with mining companies, the World Bank and the IMF, a source from the country’s ministry of mines told Reuters on Wednesday.

Mines Minister, Martin Kabwelulu, announced last month that a proposed reform of the country’s mining code would seek to raise the state owned stakes from the current 5% to 35% or more.

The proposal, reported by Bloomberg News, upset foreign miners with operations in the central African nation and had to be later clarified by the authorities. In an interview with Reuters, Kabwelulu said the DRC government would not apply the mining code changes, if implemented, retroactively.

Mining controversy is not foreign to the DRC.

Last June Kabwelulu went on the defensive about allegedly granting mining licenses to companies with close connections to the government, qualifying those accusations as uninformed and a “double standard.”

He said that the government had not benefited some firms over others, as a report from Global Witness exposed.

According to that organization, Eurasian Natural Resources Corporation (LON:ENRC), one of the largest mining groups listed on the London’s stock exchange, acquired stakes in mining concessions at prices that delivered considerable – and quick – profits to an Israeli businessman with links to the DRC government.

The country’s resource sector had already been thrown into turmoil in February with the death of the country’s go-to mining guy.

Congo is the world’s number one cobalt producer and it also holds vast deposits of diamonds, copper, tin and gold.

The DRC is the sixth largest producer of diamonds behind No. 1-ranked Botswana and followed in descending order by Russia, Australia, Canada and South Africa according to 2009 figures by The country produced 5.2 million carats that year, compared to Botswana’s 32 million.

The nation is among a number of developing countries trying to increase revenue from their mineral wealth by increasing taxes and the state’s share in profits.

Image: A Congolese girl concentrates on her assignment © UNESCO/M. Hofer, via EFA Report


If you think Congo is unstable now watch what happens when you throw oil into the mix >> >>

Death of DRC mining go-to guy will reshape country’s resource sector >>