DRC may relook state share in mine projectsComment on this story
Kinshasa - Democratic Republic of Congo is prepared to compromise on proposals to increase the state's share in new mining projects and to triple copper royalties, the vice-president of a commission studying a new mining code said on Monday.
Chantal Bashizi said the government had already lowered its proposed stake in new projects from 35 percent to 15 percent following outcry from investors in the vast mineral-rich central African nation.
“We are now discussing going further, down to 10 percent. In many of the countries in the region it is 10 percent, I think we will approve that,” Bashizi told Reuters.
Congo's rich deposits of diamonds, gold, copper, tin and coltan attract mining investors from across the world.
The International Monetary Fund (IMF) said last week Congo produced 942,000 tonnes of copper in 2013, an increase of 52 percent. That would make it Africa's largest producer of the metal, according to commodities analysis company CRU Group.
Bashizi said President Joseph Kabila's government was revising Congo's 2002 mining code in a bid to earn more from mining, while keeping the regulatory environment competitive and attractive to investors.
“We know that the original code was extremely competitive,” said Bashizi.
“We're seeking to reestablish a better balance while keeping within the regulatory standards and norms of our neighbouring countries.”
The government is due to meet again with company representatives on Wednesday in an attempt to finalise an agreed draft.
Meetings last week ended without a final agreement.
Investors have voiced concern that stability clauses, which protect companies from legal changes for a set period, will be reduced to five years from 10 under the draft code.
Shorter stability clauses would make for a less secure investing environment, tax expert David Guarnieri of mining company Tenke Fungurume, a subsidiary of Freeport-McMoRan, told a recent conference in Kinshasa.
“If an investor chooses to invest, before he can even start production the fiscal regime might change,” said Guarnieri.
“Business plans and economic plans then need a complete overhaul. Stability is what is important for investors.”
However, Bashizi said companies were not overly concerned by the change to five-year stability clauses in new contracts; rather that they objected to government proposals to alter existing contracts to reflect the new terms.
“Investors say we need to respect what has already been signed,” said Bashizi.
“We understand that.”
The government has proposed tripling copper royalties to six percent from two but Bashizi said this was also under discussion.
Congo's economy is heavily dependent on mining.
The IMF said a growth rate of 8.7 percent last year was fuelled by the buoyant sector.
It has said mining made up 15.4 percent of GDP in 2012. - Reuters