WINDHOEK, Namibia Mining
companies in the Democratic Republic of Congo (DRC) have raised
objections to the governments proposed mining code,
describing some clauses as "a step backwards."
The revised mining tax regime is
counterproductive and a breach of stability clauses that were
signed by companies in 2002, according to the DRCs
Chamber of Mines.
Mining companies are opposed to
the governments proposal to hold a 35-percent share in
mining projects, in addition to the 5 percent the state is
entitled to buy under the existing code. The move would be
"perceived and interpreted by investors as partial
nationalization of their companies," the chamber said.
The new mining code also
proposes a new tax regime and higher royalties to maximize
"If in the old mining law state
participation was voluntary, the idea of compulsory
participation without financial compensation is a step
backwards," the chamber said.
It also argued that the new
draft cannot change mining investors rights, which are
safeguarded by a stability clause signed under the 2002
"The proposals made by the state
do not meet the tax and legal parameters which prevailed at the
time when the investments were made and in particular
provisions such as the stability clause," the chamber argued.
"The impact of the proposed revised tax system will lead to a
lack of competitiveness in Congolese mining, which is also
subject to strong international competition."
AMM sister publication
Metal Bulletin warned last year that the DRC will face
difficulties in enforcing the new code, particularly its push
for 35-percent shareholding in mining projects.
The DRC wants mining companies
to pay a 6-percent mineral royalty, up from 2 percent, for
nonferrous minerals; 6 percent for strategic and precious
metals; and 6 percent for gemstones and diamonds, as well as a
35-percent corporate tax, up from 30 percent.
Mining companies will face a
50-percent super-profit mining tax, calculated if the price of
minerals increases to more than 25 percent of the forecast
price in the project bankable feasibility study.
The chamber said the super-tax
proposal "will be rejected."
Mining companies would also be
required to repatriate 40 percent of export earnings, failure
of which will attract a "fine of an amount equivalent to 5
percent of the amount not repatriated."
A version of this article was first
published by AMM sister publication Metal