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New DRC mining code could come into force within couple of days

The Democratic Republic of the Congo's proposed new mining code has not been signed into law yet, according to the country's Chamber of Mines. However, this could happen within the next couple of days, chamber President Simon Tuma-Waku told S&P Global Market Intelligence on the sidelines of the Mining Indaba in Cape Town, South Africa.

"It is on the president's table [for final approval] right now, but it has not been signed yet," Tuma-Waku said Feb. 6. "It should be signed within a couple of days."

Rumors that the new legislation had already been signed and became law were flying at the conference.

Mining companies with operations in the country, such as Randgold Resources Ltd., Ivanhoe Mines Ltd. and Glencore Plc, have spoken out againts the changes, which will see royalty tax increase to 3.5% from 2.5% and corporate tax decrease to 30% from 35% and will introduce a so-called super profit tax of 50%.

During the conference, Randgold CEO Mark Bristow said the company would consider international arbitration if the "ill-considered" mining code revisions were implemented without further discussions.

In particular, a proposal to revoke a 10-year stability clause has not gone over well with miners, as it brings legal uncertainty for investors.

Tuma-Waku said he will seek discussions with Bristow to better understand some of his criticism. "[Bristow] said that the government would take all the revenue with the new legislation. I don't understand how," he said.

He said reactions to the proposed mining code generally had been mixed. "When you move people out of their comfort zone, there is always resistance."

Tuma-Waku said the government had consulted the industry from around 2012, when plans for a new code first emerged.

"We consulted right from the beginning of 2012 up to 2014 [and] 2015. That was good, because we managed to resolve about 95% of all issues," he said. As an example, he said initial plans by the government to implement a 6% royalty tax were successfully negotiated and finally set at 3.5%.

He also said the so-called super profit tax was somewhat of a grey zone that required clear definition. By his understanding, the super profit tax will focus on commodity prices that significantly differ from prices submitted as part of feasibility studies.

Overall, Tuma-Waku said the new mining code will still be very competitive.