Democratic Republic of Congo’s decision to increase taxes under its mining code will harm investment, Mark Bristow, chief executive of Randgold Resources Ltd. said today in Kinshasa, the capital.
The Central African country, which has about half of global cobalt reserves and major deposits of copper and gold, is revising ten-year old mining regulations to boost revenue. Randgold and AngloGold Ashanti Ltd.’s Kibali gold project is scheduled to start production in 2013.
“We must all resist the temptation of having short-term gains from an industry still in its infancy,” Bristow said at the iPAD mining and infrastructure conference in Kinshasa. “Would a new investor come if the first investors were punished for their investment?”
Congo’s mines ministry has said it wants to increase the government’s stake in mining projects from 5 percent and get higher royalty payments from companies. The proposed changes, which aren’t yet public, may pass by year end, according to the ministry.
“The revision of the mining code will be a process that will be consensual,” Valery Mukasa, chief of staff for Congolese Mines Minister Martin Kabwelulu, told reporters at the conference. “We will discuss with all interested parties in a workshop to harmonize the goals. We can’t impose a text on a sector this complex.”
The Kibali project, which Bristow says will be one of the largest gold fields in Africa with 10.21 million ounces of reserves, is one of several mines slated to open or expand in the next three years in Congo’s growing gold and copper industries.
Kamoa, which owner Ivanplats Ltd. calls the biggest copper find in Congo in a century, should have a feasibility study by late 2013. Freeport-McMoRan Copper & Gold Inc.’s Tenke project and Glencore International Plc’s Katanga Mining Ltd. and Mutanda projects are all expanding to increase output.
Congo copper output reached about 520,000 tons last year, an amount the mines ministry wants to triple by 2016. Production may be down this year and future expansion thwarted by Congo’s electricity problems, companies have said.
Minmetals Resources Ltd.’s Kinsevere project had less than 50 percent of the power it needed to produce a projected 60,000 tons of copper this year and was forced to buy diesel generators in June, Executive General Manager of Business Development for Minmetals Michael Nossal said in Kinshasa.
Increased taxes in the mining code would “seriously change” the valuations of projects in Congo, Nossal said. “That will show us that the government has a more short-term vision than long term.”