DRC mining industry faces turbulence beyond Covid-19 pandemic, experts say
JOHANNESBURG - The Democratic Republic of Congo's mining industry faces a tough period beyond the Covid-19 pandemic, which has added on to existing barriers for the sector such as corruption and a lack of transparency in issuing permits for exploration, experts have said.
A press release summarising the first of a series of live webinars focusing on mining in the central African country said while some mining operations had been able to continue production despite restrictions aimed at slowing down transmissions of the coronavirus, the sector could lose jobs as companies cut costs.
Louison Kiyombo, a tax partner at accounting firm KPMG, warned about the impact of a drop in exports from a sector which contributes 20 percent towards state coffers.
"A decrease in exports means a decrease in tax collection," Kiyombo said.
"When mining companies are obliged to cut costs it may end in job losses. We are seeing several SMEs (small and medium enterprises) pushed to postpone and even to close their operations which is dramatic to the employment and tax revenues.”
Chief executive of Standard Bank DRC Amedeo Anniciello said while exports had slowed down, Covid-19 was not the only factor to negatively impact the industry.
He said the dip in imports of raw materials from China as the Asian country's economy slowed, seemed to have had less of an impact than originally anticipated.
"I don’t think that there has been a huge impact on the mining industry in terms of Covid alone," he said.
"I think there have been a number of other issues that have also impacted the mining industry, one of which was the new mining code ... and some of the mines have been trying to get to grips with what it means and how it will impact them.”
The government of then-President Joseph Kabila signed new rules into law in 2018 raising tax and royalties on mining companies.
Louis Watum, the mining director for DRC operations at Ivanhoe Mines who is also president of the DRC Chamber of Mines , said the government had some work to do to inspire confidence.
He there was a strong appetite among investors looking for new ground for exploration in particular and also in beneficiation, but it was crucial to first root out corruption.
"We need more transparency in the Congo, particularly for getting permits for exploration and so forth," said Watum.
" We need stability and certainty of regulatory framework. All these are must-haves if you want to attract big investors and really create wealth. So yes, the appetite is there, but the DRC needs to make it attractive for investors.”
- African News Agency (ANA)