Randgold Says Congo Mine-Code Change May Cut InvestmentEric Ombok
Plans by Democratic Republic of Congo to change the nation’s mining code may reduce the flow of foreign direct investment, Randgold Resources Ltd. Chief Executive Officer Mark Bristow said.
A draft of the proposals shows the government is seeking to raise taxes and royalties from miners, cut exemptions and institute a windfall-profit tax. Congo last year surpassed Zambia as Africa’s biggest copper producer, according to CRU Group, a London-based commodities analysis company.
“Like all countries, they want to get more,” Bristow said in a May 1 interview at Kibali, a Randgold mine that’s a joint venture with AngloGold Ashanti Ltd. “The big problem in the Congo is that a lot of the mining industry doesn’t actually operate under the code, so even if you change the code you don’t benefit the Treasury.”
Congo was the world’s eighth-largest producer of copper and the biggest miner of cobalt last year, according to the U.S. Geological Survey. It also holds gold, diamonds and tin. A lack of infrastructure and legal insecurity hamper investment and will undermine the government’s plans to change its mining code, which include raising taxes and boosting its share of new mining ventures, the Chamber of Mines at Congo’s main business federation said at a conference in the capital, Kinshasa, last year.
Congo needs investment to help fund rebuilding of infrastructure such as power plants, damaged by two civil wars from 1996 to 2003.
Copper and cobalt miners would consider a royalty increase to 3.5 percent if the country provided miners with enough power, according to minutes from a series of meeting between representatives from companies, the government and civil society in March. Congo announced an electricity-rationing program in January and is limiting mining-project expansion amid a power shortage that will take years to resolve. The country is importing energy from neighboring Zambia to try to fulfill miners’ needs.
AngloGold, the world’s third-biggest producer of the metal, and Randgold will double the amount of power generated at the Kibali gold mine in Congo to 47 megawatts by 2016, the companies said in a statement handed to reporters at the site on May 2.
Kibali is building four hydropower plants to add to the 22-megawatt Nzoro II facility commissioned last month, the single-largest electricity project in Orientale Province, Social and Environment Manager Cyrille Mutombo told reporters at the mine on May 1. An earlier project known as Nzoro I produces 1 megawatt that’s supplied to the neighboring community, he said.
Kibali is a $2.7 billion gold-mining project and so far about $2 billion has been invested in the venture that started in 2010, according to the companies.
The operation, which exported its first gold ahead of production schedule and forecasts last year, is currently prospecting on eight sites and plans to add three mines to the existing operation, Mines Superintendent Martin Mutata told reporters May 1.
Excavation of the first of the new open pits is expected to begin in January and another in two years, Mutata said.
Parts of Africa have high potential for “world-class gold deposits” Bristow said. They include a region known as the Lake Victoria gold fields, “a very under-explored opportunity” covering South Sudan, north-eastern Democratic Republic of Congo, parts of Kenya and Tanzania, he said.
About a third of all gold yet produced has come from South Africa, according to the World Gold Council.
Gold declined for the first time in three days, dropping 0.1 percent to $1,309.52 an ounce by 10:32 a.m. in London.