Reuters: Regulatory News: UPDATE 1-DR Congo says mining law overhaul not to be retroactive

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UPDATE 1-DR Congo says mining law overhaul not to be retroactive Nov 1st 2012, 15:07 Thu Nov 1, 2012 11:07am EDT * Government wants 35 pct of mine projects, up from 5 pct * Also plans to increase royalties * Country has rich deposits of copper, tin, cobalt and gold By Jonny Hogg BUKAVU, Democratic Republic of Congo, Nov 1 (Reuters) - D emocratic Republic of Congo's planned overhaul of mining laws, to give the state higher royalties and a bigger stake in projects, will not affect existing contracts, its mines minister said. The central African country is seeking to enlarge its stake in mining projects to 35 percent from 5 percent and increase royalties to gain greater state revenues from the sector, a move that has rattled firms active in the country. "None of the proposed revisions would be applied retroactively," Mines Minister Martin Kabwelulu said in a text message to Reuters on Thursday. Congo holds rich deposits of copper, tin, cobalt and gold and is among a number of developing countries trying to increase revenue from their mineral wealth by boosting taxes and the state's share in profits. A draft of the proposed changes in the mining law seen by Reuters on Thursday shows Congo is seeking a 35 percent stake in projects that is "free of charges and (...) non-dilutable." It also includes a proposal to double royalties on some minerals and introduces a 50 percent levy on miners' "super profits". The revised code, which is still to be discussed with the industry, defines "super profits" as those made when a commodity's price rises exceptionally over 25 percent compared with its level at the time of the project's feasibility study. "Experts from the ministry of mines are (...) already estimating that an increase in the rate of mining royalties will lead to a substantial increase in receipts for the state coming from the mining sector," the draft document said. "Given that the mining code already gives lots of advantages to mine operators, it's no longer necessary to plan for more incentives in the modified code than those that exist in the current one," it said. Shares in miners active in Congo, including Australia's Tiger Resources, initially fell after news Congo was seeking to boost its share of projects. According to the draft, mining royalties on non-ferrous metals will increase to 4 percent from 2 percent. They will also increase to 6 percent from 2.5 percent for strategic and precious metals, and to 6 percent from 4 percent on precious and coloured stones, the draft said. Mining royalties would remain unchanged at 1 percent for industrial metals, solid hydrocarbons and other non-cited substances and at 0.5 percent for iron and ferrous metals. Other proposed changes include scaling back the length of exploration permits to three years, from the four and five year permits available under the current code. According to the draft, the exploitation phase of mining licences will be reduced to 25 years from 30 years. "The duration of exploitation licences cannot exceed 25 years. It is renewable at the demand of the title holder for periods that do not exceed 15 years," the draft document said. "At each renewal the state can look at the possibility of renegotiating the modalities of its participation," it said. Other mining firms in Congo include Randgold Resources, AngloGold Ashanti, Freeport McMoRan and Glencore-owned Katanga Mining. Link this Share this Digg this Email Reprints

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