Miners Face Sudden Cost Increases After Congo Law Overhaul – by William Clowes and Thomas Wilson (Bloomberg News – January 31, 2018)

https://www.bloomberg.com/

The Democratic Republic of Congo canceled contract guarantees and hiked a key royalty in sweeping last-minute changes to a mining law that will have immediate financial costs for every mining project in the country.

The country’s parliament finalized a revised mining code on Jan. 27, after both the lower and upper houses introduced increasingly onerous fiscal and regulatory reforms to already contested legislation. The modifications significantly raise the cost of doing business for investors in Africa’s biggest copper producer, while boosting the state’s share of mining revenue.

Lawmakers went ahead with the changes even after Glencore Plc Chief Executive Officer Ivan Glasenberg met Congolese President Joseph Kabila to discuss the proposed law.

In the most dramatic overhaul, lawmakers overrode a measure in the previous law adopted in 2002 that protected license holders from complying with changes to the fiscal and customs regime for 10 years.

That means mines run by companies including Glencore, Randgold Resources Ltd. and Ivanhoe Mines Ltd. will immediately be subjected to higher royalties on metals including copper, cobalt and gold, as well as a new 50 percent tax on so-called super profits — income realized when commodity prices rise 25 percent above levels included in a project’s bankable-feasibility study.

For the rest of this article: https://www.bloomberg.com/news/articles/2018-01-31/congo-surprises-miners-with-last-minute-changes-to-legal-reforms

Comments are closed.