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Mark Bristow, CEO of Randgold Resources, speaking at the 2018 Investing in African Mining Indaba, Cape Town, South Africa. |
Randgold Resources Ltd. could face a windfall tax of up to US$10 million a year on the back of the proposed new mining code in the Democratic Republic of the Congo, the company's CEO Mark Bristow told S&P Global Market Intelligence on the sidelines of the Mining Indaba in Cape Town, South Africa.
Bristow said the number was an estimate based on a "first look."
"We are still ploughing through it but we would describe that as nonmaterial," he noted.
He also said the impact on the company's flagship Kibali operations were "benign."
"Apart from the fact that we have got (…) legal rights that are beyond the reach of the (parliamentary) houses, we are already paying 4.5% royalties (instead of 2.5%) under duress — we were objecting every time we paid them, but we paid."
Under the new code, royalties on copper, cobalt and gold will rise. In particular, a proposal to revoke a 10-year stability clause has prompted criticism among miners, as it brings legal uncertainty for investors.
The draft code was approved by the country's National Assembly and Senate but still requires final sign-off by President Joseph Kabila to come into force.
Simon Tuma-Waku, president of the DRC's Chamber of Mines, told S&P Global Market Intelligence on Feb. 6 that this could happen within the next two days.
Bristow warned that the move could jeopardize exploration and prompt bigger producers to exit the country.
"(The uncertainty) has already jeopardized exploration as far as the DRC goes, without a doubt," he flagged. "The whole of Africa has a task to re-attract investors because in the last while we have seen a massive exodus from the African continent, sub-Saharan in particularly."
"The big leavers in Africa are the big guys. The junior entrepreneurs are there but they don't bring the discipline of the fiscal regime to the fore because they have no intention of producing, whereas the big guys do," he elaborated.
This rearrangement of exploration finance could hit the DRC's economy hard.
Bristow stated, "The DRC is not a junior space, it needs to invest tens of billions of dollars to make a real impact on its economy, and it can't do that without the big investors."
Overall, Bristow remained confident that the situation will be resolved. However, he expressed hopes that a solution will be found through dialogue rather than legal rows.
"I am very comfortable. The question is, do we get there by sitting around the table and dealing with it in a proper and considerate way, or are we going to go through all (the nasty parts). I think the debate here at Indaba has reduced the risk of the latter."

