Congo Seeking Fair Deal With Mining Code Review -Official
02/06/2013| 10:48am US/Eastern
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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. (>> Tiger Resources Limited) 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 Yenga said the mining code was outdated and needed to take into account new constitutional provisions which for instance require more coordination with provincial ministers and different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. (>> Freeport-McMoRan Copper & Gold Inc.), 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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