New DRC Mining Code1 Feb 2018 11:42
S P Angel published the following today. How will it impact CASA?
"Miners are immediately facing sudden financial cost increases following the sweeping new Congolese law which overrides miners� 10-year fiscal and customs regime. The county�s parliament finalised a revised mining code on Jan. 27, after both the lower and upper house introduced increasingly onerous fiscal and regulatory reforms to already contested legislation. The modifications will significantly boost the cost of doing business for investors in Africa�s biggest copper and cobalt producer, while boosting the state�s share of mining revenue.
In the most dramatic overhaul, lawmakers overrode a measure in the previous law adopted in 2002 that protected license holders from complying with changes to the fiscal and customs regime for 10 years. Consequently, current operating miners including Glencore, Randgold Resources Ltd. and Ivanhoe Mines Ltd. will immediately be subjected to higher royalties on metals including copper, cobalt, and gold, as well as a new 50% tax on so-called super profits � income realised when commodity prices rise 25% above levels included in a project�s bankable feasibility study.
The provisions of the new law �are immediately applicable to all holders of mining rights valid� on the date it comes into force. All that remains is Kabila�s signature, which is expected before the end of next week according to Evariste Mabi Mulumba, the president of the Senate�s economics and finance commission.
If deemed a �strategic substance� by the government, the updated mining code also permits Congo, the world�s biggest supplier of cobalt, to raise the royalty on the crucial battery metal to 10% from 2%. The metal has already experienced a dramatic 120% yoy rally in price on rapid growth of lithium-ion battery demand, with manufacturers and automakers struggling to secure long-term supply. The risk of substitution is growing as rising prices are forcing battery chemistries away from an even split of nickel-manganese-cobalt (NMC 1:1:1) to nickel-heavily compositions (NMC 8:1:1). Further aggravation of the supply via an unattractive mining regime in the nation will only develop concerns and drive the price higher.
Last month, miners including Glencore, Randgold and China Molybdenum Co. sent a letter to the president of the two houses of parliament asking them to suspend the adoption of the new code and promising they would defend their investments �by all domestic and international means at their disposal�."
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