Taxes Aren’t the Real Problem With Congo Mining – by David Fickling (Bloomberg News – March 12, 2018)

Royalties are still low after an increase. The cost burden lies elsewhere.

There’s a strange thing about the fear going through the global mining industry after the Democratic Republic of Congo signed an order to lift royalties last week: Compared with most other countries, these levies are still relatively low.

The existing 2 percent rate on copper extraction compares with royalties five times that level in Chile and Peru, the two biggest producers.

Even at the new 3.5 percent rate proposed by the country’s national assembly, charges will still be lower than those paid in Australia and the U.S., according to a PricewaterhouseCoopers database of copper royalties. (There’ll be an additional levy on windfall profits, too — but the history of those taxes suggests little money will be raised, anyway.) So what’s the fuss about?

For one thing, royalties are only part of the cost mix for a mine. Congo’s southeastern copper belt is isolated and infrastructure-poor even by the standards of major mining regions.

Electricity is brought by powerlines from near the mouth of the Congo River on the opposite side of the continent, and the region has invested heavily in diesel back-up generators and upgrades to the dams and transmission lines to gain a measure of stability.

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