The Minister of Mining in the Democratic Republic of Congo has told Reuters today that the widely condemned plan for the state to take, without compensation, a 35% stake in all mining operations in the country has been changed to no longer be retroactive. The Congolese government already owns 5% of all mining operations in their nation, which is the world’s larger cobalt supplier. Congo also has substantial deposits of copper, tin, gold and diamonds.
The original plans were for the government to not only take an additional stake in mining operations for free, but to also institute a 50% windfalls profits tax on metal sales where the price realized exceeds 25% of projections of the project’s feasibility study. Royalties on metals are also planned, with levies on non-ferrous metals to double to 4%, to increase from 2.5% to 6% for strategic and precious metals (including cobalt), and from 4% to 6% on precious stones.
While no one doubts the poverty of Congo’s average citizen, today’s announcement indicates that the Congolese government realized that they were overreaching, in their attempt to change the rules mid-game on existing mining operations. Future investment in Congolese mining operations can now take into account the changed landscape when deciding if such a project would be profitable.