The revision of the Mining and Hydrocarbons Codes is currently one of the hot topic in Africa for mining projects. The Kinshasa authorities set them as priorities in their action plan for the period 2012 - 2016 and they are now negotiated with civil society organisations, NGOs, mining companies and soon, also, to be consulted with the World Bank and the IMF.
The draft of the proposed changes includes an increase of the Government’s stake from the existing 5% to 35%. It would introduce a 50% levy on miners ‘super-profits’ defined as profits made when a commodity’s price raises exceptionally over 25% compared with its level at the time of the project’s feasibility study. One of the new provisions provides, also, that companies holding mining licences will be obliged to ask whether their rights are to include associated minerals within 60 days of being ordered to do so by the local Mines Authority (“Direction des Mines”). In case of non-compliance with the condition, they risk to be charged of ‘illicit mining operations’. This strict provision concerns crucial products such as indium, lithium and germanium. Alternatively, the preliminary draft will provide the possibility for the operators to forgo the exploitation of these mentioned minerals and in that case the property of these minerals would become the property of the State.
The latest draft has came as a disappointment to many prospective investors to whom this current reform would be applied. Despite the Government’s reassurances, they are seriously concerned about the proposed changes as they could be easily deprived of significant part of their profits. A bigger stake of the State in mining projects coupled with imposed double royalties on some minerals may discourage foreign mining tycoons to invest in this African country if the reform is adopted with this current version.