Resource Nationalism continues unabated.
(BN) Congo Government Wants 35% of Mining Projects in Code Revisions
2012-10-30 12:53:31.562 GMT
By Michael J. Kavanagh
Oct. 30 (Bloomberg) -- The Democratic Republic of Congo may increase state participation in mining projects to 35 percent from 5 percent and raise royalties on mineral exports, according to a preparatory report obtained by the country's business association.
The 35 percent stake would be acquired for free and could not be diluted, according to the report, which was prepared for an inter-ministerial commission charged with updating Congo's 10-year-old mining code. The Mines Ministry declined to comment on the proposals, while the country's business association, known by its French acronym FEC, criticized them.
"We feel abandoned and we were not consulted" on the proposed revisions, Simon Tuma-Waku, the national vice president in charge of mines for the FEC, said in a phone interview yesterday. "What's important for investors is the fiscal regime and stability and we think this shouldn't be modified because right now it's very attractive for investors."
Congo is the world's largest cobalt producer and was the tenth-largest exporter of copper last year, according to CRU Group, a London-based research company. The Central African nation, which is nearly the size of Western Europe, also has deposits of gold, iron, diamonds, tin and coltan.
Freeport McMoRan Copper & Gold Inc. of the U.S., Baar, Switzerland-based Glencore International Plc, and Minmetals Resources Ltd., based in Hong Kong, have copper and cobalt projects in the country. Randgold Resources Ltd., AngloGold Ashanti Ltd. and Banro Corp. are investing in gold mines.
'Unequal Advantages'
Valery Mukasa, chief of staff for Mines Minister Martin Kabwelulu, said in an Oct. 25 e-mail that all changes to the mining code would be discussed with interested parties at an upcoming conference and that any revisions would be consensual.
Mukasa confirmed that the ministry has prepared recommendations for the inter-ministerial commission, though he declined to comment on the preparatory report, which was given to Bloomberg by a member of the FEC and whose contents were confirmed by Tuma-Waku.
The modifications were proposed "to resolve the unequal advantages given by the mining code to investors compared to those of the state," according to the 30-page report. "The rise in the mining tax rate will lead to substantial growth in revenue for the state coming from the mining sector."
The report also calls for a royalty increase to 4 percent from 2 percent for non-ferrous metals, which include copper and cobalt; to 6 percent from 2.5 percent for "strategic" and precious metals, such as gold; and to 6 percent from 4 percent for precious stones.
The government hasn't officially presented the suggested changes to miners, though companies have "managed to obtain"
the draft report and are concerned about the proposals, Tuma- Waku said.
For Related News and Information:
On Congo's Mining Industry: TNI CONGO MNG <GO> Top Regional Stories: AFTO <GO> Most-Read Africa News: MNI AFRICA <GO>
--Editors: Paul Richardson, Antony Sguazzin
To contact the reporter on this story:
Michael J. Kavanagh in Kinshasa at +243-81-715-2746 or mkavanagh9@bloomberg.net
To contact the editor responsible for this story:
Antony Sguazzin at +27-11-286-1934 or
asguazzin@bloomberg.net
By Michael J. Kavanagh
Oct. 30 (Bloomberg) -- The Democratic Republic of Congo may increase state participation in mining projects to 35 percent from 5 percent and raise royalties on mineral exports, according to a preparatory report obtained by the country's business association.
The 35 percent stake would be acquired for free and could not be diluted, according to the report, which was prepared for an inter-ministerial commission charged with updating Congo's 10-year-old mining code. The Mines Ministry declined to comment on the proposals, while the country's business association, known by its French acronym FEC, criticized them.
"We feel abandoned and we were not consulted" on the proposed revisions, Simon Tuma-Waku, the national vice president in charge of mines for the FEC, said in a phone interview yesterday. "What's important for investors is the fiscal regime and stability and we think this shouldn't be modified because right now it's very attractive for investors."
Congo is the world's largest cobalt producer and was the tenth-largest exporter of copper last year, according to CRU Group, a London-based research company. The Central African nation, which is nearly the size of Western Europe, also has deposits of gold, iron, diamonds, tin and coltan.
Freeport McMoRan Copper & Gold Inc. of the U.S., Baar, Switzerland-based Glencore International Plc, and Minmetals Resources Ltd., based in Hong Kong, have copper and cobalt projects in the country. Randgold Resources Ltd., AngloGold Ashanti Ltd. and Banro Corp. are investing in gold mines.
'Unequal Advantages'
Valery Mukasa, chief of staff for Mines Minister Martin Kabwelulu, said in an Oct. 25 e-mail that all changes to the mining code would be discussed with interested parties at an upcoming conference and that any revisions would be consensual.
Mukasa confirmed that the ministry has prepared recommendations for the inter-ministerial commission, though he declined to comment on the preparatory report, which was given to Bloomberg by a member of the FEC and whose contents were confirmed by Tuma-Waku.
The modifications were proposed "to resolve the unequal advantages given by the mining code to investors compared to those of the state," according to the 30-page report. "The rise in the mining tax rate will lead to substantial growth in revenue for the state coming from the mining sector."
The report also calls for a royalty increase to 4 percent from 2 percent for non-ferrous metals, which include copper and cobalt; to 6 percent from 2.5 percent for "strategic" and precious metals, such as gold; and to 6 percent from 4 percent for precious stones.
The government hasn't officially presented the suggested changes to miners, though companies have "managed to obtain"
the draft report and are concerned about the proposals, Tuma- Waku said.
For Related News and Information:
On Congo's Mining Industry: TNI CONGO MNG <GO> Top Regional Stories: AFTO <GO> Most-Read Africa News: MNI AFRICA <GO>
--Editors: Paul Richardson, Antony Sguazzin
To contact the reporter on this story:
Michael J. Kavanagh in Kinshasa at +243-81-715-2746 or mkavanagh9@bloomberg.net
To contact the editor responsible for this story:
Antony Sguazzin at +27-11-286-1934 or
asguazzin@bloomberg.net
