Randgold CEO Says Congo Mine-Code Change May Reduce Investment
Bloomberg - 15 hours ago
Plans by Democratic Republic of Congo to change the nation's mining
code may reduce the flow of foreign direct investment,
Randgold Resources Ltd. (RRS) Chief Executive Officer Mark Bristow said.
A draft of the proposals shows the government is seeking to raise
taxes and royalties from miners, cut exemptions and institute a
windfall-profit tax. Congo last year surpassed Zambia as Africa's
biggest copper producer, according to CRU Group, a London-based
commodities analysis company.
"Like all countries, they want to get more," Bristow said in a May 1
interview at Kibali, a Randgold mine that's a joint venture with
AngloGold Ashanti Ltd. (ANG) "The big problem in the Congo is that a
lot of the mining industry doesn't actually operate under the code so
even if you change the code you don't benefit the Treasury."
Congo was the world's eighth-largest producer of copper and the
biggest miner of cobalt last year, according to the U.S. Geological
Survey. It also holds gold, diamonds and tin. A lack of infrastructure
and legal insecurity hamper investment and will undermine the
government's plans to change its mining code, which include raising
taxes and boosting its share of new mining ventures, the Chamber of
Mines at Congo's main business federation said at a conference in the
capital, Kinshasa, last year.
Power Generation
Congo needs funds to help fund rebuilding of infrastructure such as
power plants, damaged by two civil wars from 1996 to 2003.
Copper and cobalt miners would consider a royalty increase to 3.5
percent if the country provided miners with enough power, according to
minutes from a series of meeting between representatives from
companies, the government and civil society in March. Congo announced
an electricity-rationing program in January and is limiting
mining-project expansion amid a power shortage that will take years to
resolve. The country is importing energy from neighboring
Zambia to try to fulfill miners' needs.
Randgold and AngloGold, the world's third-biggest producer of the
metal, will double the amount of power generated at the Kibali gold
mine in Congo to 47 megawatts by 2016, the companies said in a
statement handed to reporters at the site on May 2.
Kibali is building four hydropower plants to add to the 22-megawatt
Nzoro II facility commissioned last month, the single-largest
electricity project in Orientale Province, Social and Environment
Manager Cyrille Mutombo told reporters at the mine on May 1. An
earlier project known as Nzoro I produces 1 megawatt that's supplied
to the neighboring community, he said.
Kibali Prospects
Kibali is a $2.7 billion gold-mining project and so far about $2
billion has been invested in the venture that started in 2010,
according to the companies.
The operation, which exported its first gold ahead of production
schedule and forecasts last year, is currently prospecting on eight
sites and plans to add three mines to the existing operation, Mines
Superintendent Martin Mutata told reporters May 1.
Excavation of the first of the new open pits is expected to begin in
January and another in two years, Mutata said.
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SIBOMANA Jean Bosco
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