Randgold Resources Ltd. CEO Mark Bristow warned that the proposed new mining charter in the Democratic Republic of the Congo will put at risk what Randgold and other mining companies have built in the country.
"Unfortunately, all that we and other companies have built has been put at risk by recent developments that amount to no less than an abuse of the partnership concept by one side. At a time when Africa is endeavoring to become a major economic force, this is bad for the continent as well as the industry," Bristow said Feb. 6 while speaking at the Mining Indaba in South Africa.
Bristow said that while the industry is still dealing with the consequences of recent excesses, some of the industry's host governments seem to expect revenues to continue at supercycle strength. He believes that the only way for companies to be able to cope with these demands would be high-grading more and investing less, "and that is not good for anyone, let alone the future generations of our great continent."
The revised mining code was passed by both houses of parliament but still has to be signed by DRC President Joseph Kabila.
Randgold was engaging at the highest level with the DRC government about its new mining code, which Bristow said was "based on the irrational premise that the state is somehow entitled to the entire net cash flow from the mines."
Separately, the executive said during the conference that the company is ready to take its case to the International Court of Arbitration if the new mining code becomes law.
Bristow believes that Kabila will not approve the new code, as the legislation was "taken over by a lot of short political interests" and Gecamines SA, the state mining company.
Among the changes are increased royalties on metals including copper, cobalt and gold and a new 50% tax on "super profits," categorized as income realized when commodity prices surge 25% above levels indicated in a project's bankable feasibility study.
The new code also allows the government to raise royalties on cobalt to 10% from 2% should the metal be listed as a "strategic substance."
The revised mining code would be "immediately applicable" to mining companies operating in the country, including Glencore Plc, Randgold and Ivanhoe Mines Ltd.
The London-listed gold miner doubled its dividend after posting a profit attributable to shareholders of US$278.0 million for 2017, up from US$247.5 million, or US$2.61 per share, in 2016.
