UPDATE 1-Congo govt to open talks this week about new mining code

KINSHASA, March 21 (Reuters) - Democratic Republic of Congosaid it would open talks on Friday with mining companies aboutimplementing some of the most contentious provisions in a newmining code that hikes taxes and royalties in the face ofobjections from industry.

President Joseph Kabila signed the new code earlier thismonth, replacing the previous 2002 law. Foreign investors inCongo, which include Glencore, Randgold, ChinaMolybdenum and Ivanhoe, said it would scareoff investment and violate existing agreements.

In a meeting before he signed the code, Kabila assured thecompanies their concerns would be discussed in follow-up talksto draft regulations for the sector.

Mines Minister Martin Kabwelulu told reporters on Wednesdaythat the talks with major companies present in Congo, which isAfrica's top copper producer and mines more than half theworld's cobalt, would begin on Friday at 0900 GMT.

According to a work plan Kabwelulu sent to the companies,the negotiations will be divided into six "pillars" running fromMarch 16 to April 24, with a preliminary draft of theregulations to be completed by May 2. Government officials havealready begun work on pillar 1.

The regulations must be adopted by the government within 90days of the code's signing - on June 7.

The work plan sets aside 25 days - from March 27 to April 24- for discussions on the fiscal and customs regimes, includingthe new code's so-called stability clause, which is the mostcontentious point between the government and industry.

Miners enjoyed a 10-year protection under the former code'sstability clause against changes to the fiscal and customsregime but those were annulled by the new law, which says thatits provisions enter into effect immediately.

The companies still hope the government will honour the10-year exemptions but Congolese officials have said nocompromises reached in the talks can contradict provisions inthe code.

The work plan refers only to "the guarantee of stability ofthe revised mining code (five years for new mining rights)" andnot to protection for mining titles that existed under theprevious code.

It also calls for discussions about royalty increases, whichwould raise payments up to five-fold on metals designated"strategic substances" by the government.

The office of Prime Minister Bruno Tshibala appeared topreempt those discussions last week by saying cobalt, whoseprice has more than tripled in the past two years due to risingdemand for electric vehicles, would be declared a strategicsubstance and that copper could be as well.(Reporting By Amedee Mwarabu; Additional reporting and writingby Aaron RossEditing by Gareth Jones and David Evans)

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