The Country of Congo and its mining law

The executives will look for the Democratic Republic of Congo’s mining minister at this week’s Mining Indaba in Cape Town. This is to explain major shifts in royalties and tax policy in the country’s mining bill.

According to Financial Times, the bill was reportedly approved by parliament. It only awaits the president’s signature at the moment. The new mining bill is the product of an odd legislative saga. For a long time, Congolese people have requested a reform of the mining code. After two years of uncertainty surrounding the bill’s status, some, including mining minister Martin Kabwelulu, declared the mining bill to be suspended.

Meanwhile, the bill’s positive changes include a requirement that 0.3 percent of companies’ turnover goes to local development. However, raising DRC’s credibility with mining investors could be damaged if taxed are suddenly raised. The bill includes an increase in royalty rates from 2 or 2.5 to 3.5 percent for non-ferrous and precious metals. Aside from this is up to 10 percent for minerals, which considered “strategic.” The law professes to be instantly used to existing mining projects as they ignore the current code’s 10-year stabilization before any legal or fiscal changes apply.

On the other hand, one additional concerning issue is the corruption that has characterized the sector goes unaddressed. The new bill explicitly permits government officials to own mining companies. This is along with a new requirement that Congolese nationals must own at least 10 percent of the mining companies’ capital. As expected, this creates conflicts of interests.

In the end, it will probably create costly legal complications, as its affectivity could be delayed if this bill becomes law. Also, this will potentially lead to the need for further revisions in the near future. The end result risks failing to fulfill its promises to the Congolese people five years after the mining code review started. Maybe more fund in the bank is needed to accomplish this project.