DMRE
BMI Research - a unit of the Fitch Group – states the Democratic Republic of Congo will introduce modifications to the country's mining regulations in the coming months.

It points out this is not the result of a broader uptick in populist Democratic Republic of Congo government policy.

The current mining code, formulated in 2002, includes a very favourable fiscal and ownership framework. While this regulatory regime was necessary to attract investment to the undeveloped mining sector following years of civil war, it is now deemed out-dated in relation to the framework in place in other countries in the region.

The latest rounds of changes were originally submitted to parliament in March 2015 but were suspended due to the commodities slump.

However, in May 2017 the Democratic Republic of Congo government announced it would revisit shelved regulatory amendments , leveraging the recent recovery in global commodity prices and the country’s growing strategic importance as the largest global supplier of cobalt, used in the booming batteries market.

The new proposals include a raise in taxes on profits from 30% to 35%, increase the government’s s take in new mining projects from 5% to 10% and increase royalties from 2% to 3.5% for copper and cobalt.

These measures will increase costs for miners operating in the country but are unlikely to impact investor sentiment, as royalties and government stakes in projects remain below the norm of other important mining jurisdictions.

As an example, Zambia – considered a favourable mining investment destination in the region – has a maximum copper royalty rate of 6%, while most African countries demand at least a 10% s take in mining projects.

Furthermore, the current mining code in Democratic Republic of Congo includes a 10 -year stability clause so that any changes in regulations will not immediately affect current mining operations.

Feature image credit: Wikimedia