Bloomberg News

Congo Mining Code Raises Taxes, Curbs Exemptions, Minister Says

February 15, 2012

Feb. 9 (Bloomberg) -- Democratic Republic of Congo’s revamped mining code will increase export taxes, limit exemptions and impose stricter regulations forcing companies to process ore, Mines Minister Martin Kabwelulu said.

“A company can already be in production for eight or 10 years and it still” enjoys tax exemptions, Kabwelulu said in an interview yesterday at the Investing in African Mining Indaba conference in Cape Town. “That needs to change.”

Congo supplies more than half the world’s cobalt, a metal used in rechargeable batteries, and is Africa’s second-biggest producer of copper after southern neighbor Zambia. Companies including Freeport McMoRan Copper & Gold Inc. and Glencore International Plc operate mines in the country, most of which are situated in the southern Katanga province.

The code, which Kabwelulu said will be negotiated in consultation with companies, donors and civil society, will replace existing rules that have been in effect for a decade. He was unable to say when the new code would be in place.

The measures will set into law steps taken by the government on an ad-hoc basis. President Joseph Kabila’s government has previously banned the export of ore and concentrate and imposed a moratorium on tax exemptions agreed on an individual basis.

Under the new code, companies will have to pay more than the current 2 percent to 5 percent in taxes when shipping their products, allowing the central African nation to bolster revenue and finance export services, Kabwelulu said.

The number of titles an individual mine operator can own will be cut from the current 50, he said. Operators will also need to start processing ore within a specific timeline, forcing them to build purification plants and creating jobs in Congo.

Operators “shouldn’t come and set up to export ore or concentrate,” Kabwelulu said. “We need someone who can set up to achieve maximum output by exporting metals.”

--Editors: Jennifer M. Freedman, Alan Crawford

To contact the reporter on this story: Franz Wild in Johannesburg at fwild@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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