The Republic of the Congo, often called Congo-Brazzaville, is a country located in Central Africa that straddles the Equator line and covers a surface of 342,000 km2 with a population of approximately four (4) million. The country is bordered by Central African Republic and the Republic of Cameroon to the north, the Democratic Republic of the Congo to the south and east, the Republic of Angola (Cabinda) in the south and the Republic of Gabon to the west. The Republic of Congo has a sea coastline of 170 km along the Atlantic Ocean.
The Republic of the Congo is endowed with significant mineral resources and if developed, they could constitute an important source of wealth for the country. Indeed, apart from oil which is the major cash cow of the country (over two-thirds of the national GDP and around 80% of exports come from oil), the country abounds with many and varied mineral resources such as copper, lead, zinc, gold, diamond, silver, coltan, cassiterite, wolframite, nickel, tungsten, rare earths, potash, phosphates, sandstone oil, peat, titanium, building stones, ornamental stones, graphite, clay, cobalt, molybdenum, bauxite, etc.
In 2012, approximately 100 new mining titles were granted by the Congolese authorities, except for renewals, meaning an average of about two new mining permits issued each week. This dynamism is confirmed for the year 2013 in which about 110 new titles have already been granted (late August), excluding renewals of around 16 titles. In addition, since 2011, more than a hundred companies are conducting mining operations throughout the country.
I. Legal framework
The mining sector in the Republic of the Congo is essentially governed by Law No. 4-2005 of April 11, 2005 on Mining Code; Law No. 24-2010 of December 30, 2010 fixing the rates and rules for levying mining titles; Decree No. 2007-274 of May 21, 2007 establishing the conditions for prospection, exploration and exploitation of minerals and the conditions for the exercise of administrative monitoring; Decree No. 2007-293 of May 31, 2007 establishing technical guidelines for quarries and geomaterials mining; and Decree No. 2008-338 of September 22, 2008 establishing and organizing the Bureau of expertise, evaluation and certification of precious minerals.
The Mining Code applies to prospecting, research, exploitation, possession, movement and processing of mineral or fossil substances across the country. Hydrocarbons are excluded from the scope of the Mining Code.
Apart from the Mining Code and the above mentioned texts, other texts are governing mining activities in Congo. These include Law No. 003/91 of April 23, 1991 on the protection of the environment, and Law No. 6-2003 of January 18, 2003 establishing the Investment Charter.
II. Ownership of minerals and role of the State
Mineral or fossil substances in the soil and sub-soil of the Republic of the Congo are the national mining heritage. They are the property of the State, in accordance with the Constitution of January 20, 2002.
However, the exploitations of these substances is essentially carried out by foreign private companies to which the State assigns the right to manage one or more mining operations on mineral or fossil substances in the soil and subsoil. Mining is therefore open to free-enterprise.
Furthermore, mines or deposits of minerals discovered by state companies on their behalf, can be exploited either directly or on a party management or by any other means, including in association with private companies or other public enterprises.
III. Mining titles
Any person or legal entities wishing to conduct mining operations must obtain corresponding titles. For this purpose they must have technical and financial capacities necessary for proper performance of mining operations.
The Mining Code organizes industrial mining activities in three phases corresponding to four main types of mining titles: prospecting authorization, research permit, authorization of industrial exploitation and exploitation permit.
- The prospecting authorization
The prospecting authorization is issued to conduct mineral prospecting. It is issued by order of the Minister of Mines for a period of one year, renewable once for the same duration. The prospecting authorization may, at any time, be extended to minerals not originally covered by the mining title. It gives the holder different rights: the right to do prospecting, the right to move minerals for testing, and the right to apply for exploitation authorization, research or exploitation permit.
- The research permit
The research permit is issued to conduct mining research operations. It is granted by decree of the Council of Ministers upon a report of the Minister of Mines. It is issued for a period of three years and is renewable twice during the biennum.
The research permit may be extended to new minerals substances in the same form and manner as the granting of the initial title. It gives its holders various rights, namely the exclusive right to explore and research mineral or fossil substances, the right to dispose of minerals found in the course and for research purposes, as well as the granting of mining exploitation rights for the discovered resources.
- The authorization of industrial exploitation
The authorization of industrial exploitation is granted for exploitation of quarry and small mines characterized by small scale investment in technical, human and financial operations. It is granted by order of the Minister of Mines for a period of five years, renewable for similar period. The authorization of industrial exploitation can be extended at any time, with mineral substances not initially covered.
Rights conferred under this mining title gives the holder the exclusive right to undertake research and exploitation and the exclusive right to benefit from an exploitation permit when operating activities reach the level that justifies the granting of such license, and the ability of the licensee to mine quarries if their operation taking place on the same site, is directly related to the implementation of projects to improve transportation infrastructure and scheduled for less than a year.
- The exploitation permit
The exploitation permit is granted for large mines. It is granted by decree of the Council of Ministers upon proposal of the Minister of Mines for a maximum term of 25 years and renewable for periods of up to 15 years each.
With regards to the rights conferred, the exploitation permit grants an exclusive right of use of these substances in a defined scope and an indefinite depth. In addition, it allows the licensee to use the sand and gravel contained in the area covered by the said permit, the strict need for activities related to its operation.
Furthermore, if the permit holder discovers, during the operation and within the scope of the permit, different substances covered by this permit, he can request additional exploitation permits for each substance discovered.
IV. Mining conventions
Any research or exploitation of mineral or fossil substance leads to the signing of a mining investments convention between the State and the holder of the title. Under that convention, the State enjoys free equity from beneficiary private companies. The rate of participation is 10%, which corresponds to the lower threshold of current practices in Africa.
The convention must contain some mandatory clauses, for example, the company business address in Congo, technical and financial guarantees, or the opening of a bank account to be used for restoring mining sites or honoring the fiscal regime for depreciation.
V. Mining transactions
The Mining Code provides that the granting of mining rights creates, in favor of the owners, property rights that cannot be mortgaged. With the exception of the prospecting authorization, mining rights are assignable and transferable to third parties, subject to the prior approval of the Minister of Mines, or the central administrative officer of the mines in the case of authorization of artisanal exploitation. In addition, industrial mining titles, namely the exploitation permit and the authorization of industrial exploitation are also leased, subject to prior approval of the Minister of Mines.
VI. Environmental requirements
Law No. 003/91 of April 23, 1991 on the protection of the environment includes provisions for the protection of human settlements, fauna and flora, air, water and soil. This law defines the rules applicable to classified facilities and determines taxes and fees relating thereof. In addition, under this law, no economic development project can be implemented without an environmental impact assessment.
Furthermore, the Mining Code requires that activities of mining and quarry research and exploitation must comply with specific obligations, such as the safety and health of employees and communities, the protection of the environment, the safety of soil and secure housing, protection of water sources and sites reclamation.
Finally, any exploration or exploitation project of natural resources on lands traditionally occupied or used by indigenous people is subject to a prior socioeconomic and environmental impact assessment. These people cannot be displaced from lands they own or traditionally use, except for public interest purposes.
VII. Mining administration
The mining sector management is ensured by the Ministry of Mines and Geology which consist of general directorates such as, general directorate of mines and mining industries and the general directorate of geology. Likewise, the general directorate of mines and mining industries is divided into several departments: mining, mining and quarry, and small-scale mining and artisanal mining, department of technical control and certification, department of administrative and financial affairs, and departmental divisions.
In addition, two other institutions have been created. On the one hand, the center for geological and mining research, a public administrative and technical institution under the control of the Ministry of Mines and Geology tasked to promote and develop the mining sector, to conduct or requisition particular research studies relevant to the advancement of knowledge of geology and minerals of the national soil and sub-soil, and on the other hand, the office of expertise, evaluation and certification of precious minerals is a technical body under the Ministry of Mines.
Moreover, three main public actors intervene in the process of granting mining titles:
- the President of the Republic who grants research and exploitation permits by decree deliberated in the Council of Ministers;
- the Minister in charge of mining sector who prepares the draft of the decree deliberated in the Council of Ministers for research and exploitation permits, and grants prospecting and industrial exploitation authorizations by ministerial decree;
- the mining central administrative officer who grants artisanal exploitation authorizations.
VIII. Tax and customs regime
The prospecting and research activities result in levying fixed charges (granting, renewal or transfer of mining rights...) and payment of area levies. With regard to mining and quarry exploitation activities, they lead to the payment, in addition to other taxes and duties under the General Tax Code, of area levies, mining royalties at a fixed rate and tax on construction geomaterials.
The area levy is fixed between 1,000 and 25,000 CFA francs per km2 per year depending on the mining titles. The mining royalty varies between 1 and 5% depending on the minerals. The rate of the said royalty applies to the market value of the "mine-head ", this value of a substance being the market price at export. The tax rate on corporate profits is 20% for quarry and 30% for mining.
In addition, materials, equipment, supplies, machinery, and light vans imported into Congo by mining companies are declared under the temporary importation procedure, free of duty and taxes on imports and exports, with the exception of the computer fee. Furthermore, eligible mining companies can also benefit from tax and customs privileges granted under the Investment Charter, such as the exemption or reduction of 50% of the corporate tax.
Finally, the Mining Code warrants fiscal, financial and exchange controls conditions during the period of validity of mining titles. In addition, during the same period, the holders of those titles are admitted under more favorable conditions.
IX. Exchange rate regime
Foreign companies are subject to exchange control regulations and benefit from the free convertibility between the domestic currency and foreign currencies. Congo is a member of the Economic and Monetary Community of Central African States (CEMAC). Within the CEMAC, foreign exchange regulation states that the purchase and selling of currencies other than the euro shall be set based on the fixed exchange rate of the CFA franc against the euro. The rates of these currencies against the euro are based on foreign exchange markets.