AVZ minerals

The Federation of Enterprises of Congo (FEC) has issued a statement contesting those mining companies which have chosen to exit from the Federation because it did not represent them fairly during revision of the DRC Mining Code.

In a letter addressed to the Head of State on 8 February 2018, mining companies affirmed that the FEC had not sufficiently played its role of promoting their interests during the revision period of the Mining Code.

The FEC regrets that such a charge is made by its own members while all the actions it has taken in their favour since the beginning of the revision process, but also before, clearly proves the opposite.

While the FEC recognises that these companies have the right to resign from the Federation in accordance with its statutory provisions, it strongly contests the reasons given for their decision, which in fact seems to be only provoked by their disappointment at not having been sufficiently followed in their proposals by Parliament.

The role of the FEC

The FEC reminds all its members that the function of a national employers’ union, and even more so the first of them, is not to be a simple registration chamber and to promote their requests, whatever they are.

These represent and deliberate in favour of the interests of the entire economic fabric of the DRC, in accordance with the purpose of the FEC which aims in particular in Article 3 (1) of its statutes, to: “Promote the interests of companies from different sectors of economic, social and scientific activities, in harmony with the common wealth”.

With regard to the activities of the FEC for the mining sector in general (I) and the Mining Code in particular (II), it should be recalled that the FEC has always committed itself to its members.

Mining companies have not paid their share, and new taxes still below average

The FEC was associated and participated between 2013 and 2014 in all the work of the tripartite, which brought together the government, the civil society and the private sector.

These various meetings helped to harmonise the views on a large number of provisions, with a few exceptions, and was sanctioned by a report on 10 March 2014 signed by the vast majority of companies now resigning.

The FEC also recalls that it is this action that in 2015 led the government to delay the examination of the draft law on the revision of the Mining Code, at a time when the situation appeared to be unfavorable to a change in legislation.

However, the FEC reminds to all that the principle of the revision of the Mining Code had been acquired in the texts since 2012 and was made all the more necessary because of the inability of the code to propose a legal framework in line with the expectations of the State in terms of creation, but especially redistribution of wealth.

It is important to remember that the main mining titles of the country, which had been ceded to foreign investors, had been in exchange for substantial revenue promises for the State, promises of which none has materialised to date.

This situation was confirmed by the World Bank Group, in its April 2016 Report on DR Congo entitled Revision of the Mining Code – Reviews, Observations and Comparative Analysis: “The DR Congo could not recover the expected revenues from intensive mining and take advantage of expected economic benefits “.

For the World Bank Group, which was at the origin of the Mining Code of 2002, but which subsequently demonstrated the need for its revision: “foreign investors have benefited more from the boom in the natural resources sector from 2007 that the Congolese Government “.

Despite this clearly unbalanced situation and a situation that has once again become very favourable to the mining sector since the end of 2016, the FEC, when the file was taken back to the National Assembly in 2017, continued to support the mining companies with the authorities and allowed the Chamber of Mines, mainly made up of companies now resigning, to give its own reading on the draft code and make its proposals.

Today, after the vote and the promulgation of the new Mining Code, the FEC regrets that this group of foreign companies, dissatisfied with the vote of the Parliament and the promulgation by the President of the Republic of the New Mining Code, have publicly surrendered because of their declarations, the legitimacy and the sovereignty of the expression of the popular vote.

The FEC recalls that in the DRC, as in almost all the countries of the world, the adoption and promulgation of the Mining Code is the exclusive competence of the State, owner of the Congolese soil and subsoil.

For the FEC, the attitude of these companies is not in accordance with the respect that any actor must have vis-à-vis the country in which it operates.

In addition, the FEC does not understand, faced with evidence, the obstinacy of mining companies wanting to defend preferential regimes obtained in the late 90s and early 2000s and of which they are the only ones to benefit in the DRC.

This situation poses a problem of equity vis-à-vis other industrial sectors present in Congo whose economic and social benefits are essential for the country, particularly in terms of employment, local investment and outsourcing.

Finally, the FEC finds that far from posing a threat to this industry, the new legislation will position the country in the low global average, as well as the International Bloomberg News Agency, noted: “Mining royalties in Congo will remain among the lowest, even after an increase.” “Even at the new rate of 3.5% proposed by the National Assembly of the DRC, he adds, costs will still be lower than those in Australia and the United States, according to PricewaterhouseCoopers’ copper royalty database. ”

In view of all the above and beyond the announcement of the resignation of this group of international investors, the FEC deplores an attitude that disregards the interests of the country in which they operate, only to worry about their own interests, in a situation that should be favourable to all.

FEC actions for the mining sector

Through its recurrent actions, the FEC has always stood up for its members. Thus, it has allowed them to benefit from a number of advantages, such as:

  1. The cancellation of the claim, by the DGRAD, of the payment of 1% of the rights proportional to the mining companies during the integration of the law OHADA.
  2. Exemption of mining companies from the Minimum Tax on Profits and Profit (IBP).
  3. Principle of refunding VAT credit to mining companies members of the FEC through the mechanism of compensation with other payments to the Congolese State.
  4. The signing of Decree No. 15/009 of 28 April 2015 on tax and customs concessions materialised these tariff commission resolutions and imports of electricity from the mines did not bear the entrance fees.
  5. The instruction given by the Minister of Finance to postpone the application of the provisions that oblige mining companies to pay VAT on imports, which was renewed in 2018.
  6. The suspension of claims for payment of fees for import penalties without Import-Export Number.
  7. The overthrow of the approach initiated by the Government asking the mining companies to sell the foreign currency repatriated to the Central Bank, a measure that was likely to paralyse the operation of mining member companies.
  8. The cancellation of the INSS counter-verification of the payment of social security contributions by mining companies.

More general and on a daily basis, the Chamber of Mines of the FEC intervenes in the Provinces in the complex relations between the local administrations and the mining companies with a view to their harmonisation.