The Mining Promotion Initiative was launched by mining companies including top cobalt producer Glencore, Ivanhoe Mines and MMG.
International miners with assets in the Democratic Republic of Congo (DRC) have established a new industry body to engage the government on their concerns about the mining sector.
The Mining Promotion Initiative (MPI) was launched by mining companies including top cobalt producer Glencore (LSE:GLEN), Ivanhoe Mines (TSX:IVN) and MMG (HKG:1208). The miners represented by the organization account for 80 percent of copper and cobalt production in the country.
MPI general secretary Richard Robinson said the industry’s main issue remains the application of the 2018 mining code.
According to the MPI, the new code compromises those investors who have invested in the country individually and alongside state companies, on terms guaranteed by the government through legislation, specific guarantees and bilateral trade agreements.
Furthermore, should some of the key issues in the new code not be addressed it would discourage further investment in large and small sustainable projects, which is crucial for the DRC economy as well as the mining sector.
More than 50 percent of cobalt, a key element in lithium-ion batteries used to power electric cars, is mined in the DRC, and the country is also Africa’s largest copper producer.
“That is why we are committed to continue working with the government to seek a mutually agreeable solution and improve the legal framework for current and new investments,” Robinson said.
The new mining code was signed by President Joseph Kabila on March 9, despite opposition from international miners.
The legislation removed a measure protecting licence holders from complying with any rule changes for 10 years. It also hiked royalties on minerals across the board and added a 50 percent tax on super profits.
Earlier this month, Glencore’s CEO Ivan Glasenberg said the company was reluctantly paying higher taxes under Democratic Republic of Congo’s new mining code but the industry was considering legal action against it.
According to analysts, consumers could be the most impacted by the changes, as it is likely they could lead to higher costs for the battery metal. Cobalt metal prices on the London Metal Exchange are currently sitting at US$64,000 per tonne.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.