Congo's Kabila Signs New Mining Law Despite Companies' Opposition

Congo's Kabila Signs New Mining Law Despite Companies' Opposition

The Democratic Republic of Congo has moved to increase taxes on mining firms and increase government royalties from the industry despite fierce opposition from international mining companies.

President Joseph Kabila signed into law on Friday a new mining code that raises royalties and taxes on operators, the presidency said in a statement.

The country is Africa's biggest producer of copper and cobalt, a vital component in mobile phone batteries.

Foreign mining firms strongly opposed the law, saying their operations in DR Congo would stop being profitable.

The law, passed by parliament in late January, replaces an earlier code from 2002. It raises royalties on minerals across the board and removes a clause that protected miners from changes to the fiscal and customs regime for 10 years.

Executives from Glencore, Randgold, China Molybdenum and Ivanhoe failed to convince Kabila during a six-hour meeting on Wednesday to re-open negotiations over the code, which they say will deter investment and violate existing agreements.

The two sides agreed, however, to open negotiations next week over measures to implement the code, and Mines Minister Martin Kabwelulu said the companies’ concerns would be considered on a case-by-case basis.

Royalties on cobalt, a vital component in electric car batteries, could increase fivefold to 10 percent if the government designates the metal a “strategic substance”. The law also introduces a windfall profits tax.

DR Congo's resources have been a catalyst for past conflict

Its mining industry - which also produces diamond, tantalum, tin and gold - is the country's largest source of export income.

The law, which was passed by parliament in January, will double government royalties on all minerals.

The impoverished yet mineral-rich nation provides more than 60% of the world's cobalt. Prices for it more than doubled last year thanks to an increased demand for electric cars, which require cobalt for batteries.

Royalties on cobalt could also more than quadruple if the government labels it a "strategic substance".
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