Martin Kabwelulu, Minister of Mines of the Democratic Republic of the Congo (DRC), has said that the country’s new mining code, which was passed into law in March despite protests from large mining companies, cannot be questioned.
The legislation removed a clause protecting licence-holding companies from any future law changes for the next ten years, meaning that any company mining in the DRC could be affected by future amendments to the law.
The new code also increased mineral royalties and introduced a 50% super profits tax. Many of the DRC’s mining operations were initially state-owned, and the government wants to ensure that the country can benefit from the mining industry as the sector shifts to private ownership.
“It is not the place of any participating party, whether civil society, mining companies or even the government to try to call into question the text governing the mining sector,” said Kabwelulu on Wednesday at a mining conference in the city of Kolwezi.
Companies including Glencore, Ivanhoe and MMG opposed the new code, arguing that their operations are now vulnerable to future tax hikes, which threatens profitability. The companies have since pressed the government to soften the conditions, however their attempts have been unsuccessful.
In August, the three companies formed an organisation known as the Mining Promotion Initiative (MPI) to more effectively pressure the government to lower taxes and royalties.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
Members of the MPI account for 80% of copper and cobalt production in the country. The DRC is Africa’s largest producer of copper and the world’s leading producer of cobalt, so the group expected to have significant influence with the government.
However, DRC President Joseph Kabila, also speaking at the conference, urged the companies to adapt to the law, rather than expect it to be changed.
I call on investors to move beyond the comfort of the land and concessions that were ceded to them by different state companies … to take real risks by exploiting the rest of the country,” he said.