emocratic Republic of the Congo Prime Minister Bruno Tshibala will sign into law regulations to immediately implement a new mining code, a move that could spark a legal battle between the government and major miners operating in the country, Reuters reported June 7.
The law proposes to hike royalties on a slew of metals to 3.5% and end a 10-year stability clause. It allows a higher royalty on strategic metals such as cobalt and introduces a 50% super-profit tax.
In December 2017, the country’s lower house adopted a revised code, in which it includes a 10% increase in state’s unpaid share on new mining projects compared to 5% previously, while large-scale mines would have to give at least a 10% project stake to a Congolese investor.
The consortium of miners in the Democratic Republic of the Congo, which include Randgold Resources Ltd., Ivanhoe Mines Ltd., AngloGold Ashanti Ltd., Glencore PLC, MMG Ltd., China Molybdenum Co. Ltd. and Zijin Mining Group Co. Ltd., previously proposed amendments or to relax certain provisions of the code.
According to the newswire’s report, the law to be implemented will not contain any amendments to key provisions requested by the miners in the country.
The companies warned the government of the Democratic Republic of the Congo that it could lose more than US$3 billion from the existing copper, cobalt and gold projects over a decade and face legal action if it implements a new mining code.
Mining companies with operations in the country have spoken out against the changes, saying it will cut too deeply into profits and hurt mining investment in the DRC.