Kinshasa, DRC – MININGREVIEW.COM — 31 July 2008 – The effects of measures to fight mineral export fraud have boosted the Democratic Republic of Congo (DRC) government’s income from copper and cobalt mining this year, but red tape and higher local taxes are driving up costs for mining companies.
Having held historic post-war elections in 2006, the DRC is one of the most attractive mining areas in Africa, but reporting from here Reuters quotes analysts as saying that the sector is still rife with corruption, and its potential has not been fully realised.
Beginning last year, the southeastern province of Katanga – which lies in the heart of the copper-belt – banned exports of raw minerals, tightened controls on processed ore and cracked down on customs agents involved in fraud. Combined with an overall rise in production, these measures dramatically increased the flow of revenue into government coffers, said Katanga Mines Minister Bartelemy Mumba Gama.
“If you see that we have already surpassed our revenues for the whole of last year, it’s a fairly serious indicator,” he told Reuters in an interview in Katanga.
The news agency reports that a tax of 2% on the assessed value of exported minerals generated US$19.9 million (almost R160 million) between January and June this year, compared with US$15.8 million (R126 million) for the whole of last year and US$5.7 million (R45 million) for 2006.
Currently companies must produce copper and cobalt concentrate as a minimum exportable commodity. Earlier this year, Katanga’s government brought in foreign engineers to ensure that companies had the proper facilities to treat their ore, and laboratory controls have been tightened to ensure that the concentrate exported is not under-valued.
“Before the analysis was either not done at all, or not done seriously,” Mumba Gama said.