International mining companies operating in Democratic Republic of Congo are mounting a coordinated campaign against a new mining code they say will stifle investment there, Randgold’s chief executive told Reuters.
Mark Bristow said he expects the DRC government to agree to amend the code, which the Senate passed last month and raises royalties on metals such as gold, copper and cobalt as well as taxes on the companies themselves.
Bristow said on Monday that higher royalties would discourage investment but the key objection was that the new code dispensed with a clause in the previous charter protecting miners from changes for 10 years.
International miners operating in Congo were putting together a formal group to spearhead lobbying efforts, Bristow said. Miners working in Congo include Randgold, Glencore, Ivanhoe and China Molybdenum Co.
“We are engaging with everyone from the top to every ministry – prime minister to ministers of mines, ministries, civil society, senators, parliamentarians, foreign lenders, the whole nine yards,” Bristow said.
“There’s no one that’s international and has significant investment in the mining industry (in Congo) that has declined the invitation (to join),” he said.
Asked whether he considered the new code illegal, Bristow said: “It’s attempting to disregard a law approved and passed by the House and the Senate. If the new code is attempting to ignore the previous laws then it is.”
Ivanhoe chairman Robert Friedland said his company expected the government would respect and protect the spirit and the letter of the existing mining code.
“However, there remains the distinct possibility of unified, industry-led actions if the proposed changes do become law,” he said in a statement on Monday.
Randgold, which gets 45 percent of its gold production from DRC, is asking for the code to be returned to the Mining Ministry for further consultation with miners. If this does not happen the company will mount a challenge through international arbitration, it said on Sunday.
“I believe the chances of success are very high, ultimately. The question is, does this have to get into a confrontation to get there?” Bristow said.
“What’s being proposed results in a new investor on a new project ending up not making a single dollar return. That doesn’t work and so ultimately that will drive a review.”
Randgold earlier on Monday doubled its annual dividend after profits rose by 14 percent in 2017.
Its shares ended down 7.4 percent after Bristow took the market by surprise during an investor briefing when he said that Randgold was now paying royalties of 4.5 percent – 1 percent above the 3.5 percent in the existing code.
Source: Reuters
