By Alex MacDonald
CAPE TOWN--In a bid to make sure the mining code complies with
the country's constitution and also represents a fair deal for its
citizens, the mineral-rich Congo is reviewing its mining code, a
senior Congolese Mining Ministry official Wednesday.
The mining code, which encompasses how exploration and mining
licenses are granted, was instituted in 2002 but hasn't been
updated to comply with the country's new constitution, which was
ratified in 2006.
Some mining executives have expressed concerned that the review
could result in higher royalties, higher state-ownership in
projects or both. Copper producer Tiger Resources Ltd. (TRSDF) said
it expects both royalties and state-ownership stakes could increase
but doesn't expect its Kipoi project to be affected.
Mabolia Yenga, the ministry's national coordinator on technical
and financial assistance with the World Bank and the U.K.
government's Department For International Development, told Dow
Jones Newswires on the sidelines of the Indaba conference that, "We
are looking to find a fair share deal, to look at what is or is not
working." He indicated it is possible no changes will be made but
said if the government were to make any changes, it would do so in
mutual agreement with stakeholders and wouldn't impose any new
regulation on companies.
"We are not going to be foolish," he said. "We are looking for a
win-win situation," he added.
Mr. Yenga said the mining code was outdated and needed to take
into account new constitutional provisions which for instance
require more coordination with provincial ministers and different
environmental policies.
He said the review will particularly focus on how exploration
licenses are awarded to make sure the country gets a better deal
rather than just giving it away on the cheap only to see a mining
company flip it for a higher return.
Jean-Felix Mupande, the general manager of the ministry's mining
registry, told Dow Jones Newswires that raising taxes "is not at
the center of the review" but he didn't rule out the
possibility.
Mr. Yenga said the government is hiring a consultant to help the
government adapt its mining code to the constitution while also
taking into account the best practices of mining codes from other
nations. He noted that the review wasn't instigated at the behest
of the World Bank but rather to update the code to the requirements
of the constitution.
A senior executive at Tenke Fungurume, who attended the
Congolese Mining Ministry's breakfast seminar on Wednesday, told
the audience that "we are hopeful that this [review] will be done
in such a fashion so that it will not deter but encourage
investment."
Tenke Fungurume is a joint venture between Freeport-McMoRan
Copper & Gold Inc. (FCX), Lundin Mining Corp. (LUN.T), and
Gecamines that produces copper in the Katanga province of the
Congo. It paid the government last year $200 million in taxes,
royalties and administrative services and has paid more than $700
million to the government since the project began in 2006, the
senior executive told an audience at the breakfast meeting.
Write to Alex MacDonald at alex.macdonald@dowjones.com
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