DON'T MISS : Talking Africa New Podcast – Coronavirus warrior Dr John Nkengasong is not happy about corruption in PPE procurement

No measurable benefit in DRC tax hike in new mining code – Mark Bristow

By Aaron Ross in Kinshasa (Reuters)
Posted on Thursday, 23 October 2014 05:29

Speaking at a mining conference in Kinshasa, Mark Bristow, the CEO of gold miner Randgold Resources Ltd, criticised Congo’s Prime Minister Augustin Matata Ponyo for seeking quick tax revenue gains at the expense of the sustainable growth.

This country can’t afford to make itself even less competitive than it is today

Congolese and international consultants are currently preparing recommendations for the government ahead of a revision of the country’s mining code, which was enacted in 2002.

“We heard a repeat of this just recently with the prime minister’s speech in parliament where he doesn’t seem to understand we have to build an industry before we can harvest,” Bristow said.

Matata Ponyo has been vocal about the need to increase the tax take from Congo’s mining sector.

In March, he said he intended to almost double tax revenues from mining to 25 percent of the national budget by 2016, up from the current 14.5 percent.

Congo’s economy was long crippled by mismanagement, corruption and two decades of armed conflict in the country’s eastern borderlands.

But investors are now rushing to cash in on largely undeveloped reserves of copper, gold, and cassiterite.

The economy is set to grow by 10.4 percent next year, the government said earlier this month, due in part to the expanding mining sector.

Negotiations falter

Despite its mineral wealth, Bristow said that Congo needed an especially attractive mining code to compensate for its deficits in other areas.

Scant geological information, a low skill base among its population and political instability all increase costs and investment risks, he said.

“This country can’t afford to make itself even less competitive than it is today,” he said, adding that the current code should be changed as little as possible.

“Maybe there’s a reason to tinker with parts of it, but to rewrite it would be, for my mind, an endeavour which has no measurable benefit to anyone.”

Negotiations over the revision have faltered because of disagreements about proposed increases in royalties.

Miners and the government have also been at loggerheads over a proposed reduction in the length of stability clauses and a 40 percent windfall tax, according to analysts.

Randgold operates the Kibali gold mine in northeastern Congo, a joint venture with AngloGold Ashanti and state miner Sokimo that officials hope will mark a renaissance for gold mining in the country.

The mine poured its first gold last September and Randgold said in a statement this week that it expects to produce 650,000 ounces of gold per year over the next 10 years.

Mining minister Martin Kabwelulu told the conference Wednesday that gold production could reach 18 tonnes in 2014, up from just 100 kilograms in 2007.

We value your privacy

The Africa Report uses cookies to provide you with a quality user experience, measure audience, and provide you with personalized advertising. By continuing on The Africa Report, you agree to the use of cookies under the terms of our privacy policy.
You can change your preferences at any time.