Revised Code still plagues investors

17th February 2023 By: Nadine Ramdass - Creamer Media Writer

Revised Code still plagues investors

WARREN BEECH New initiatives address a multitude of challenges impacting on the DRC mining industry

The Revised Mining Code, and the subsequent attempts to clarify it, has created significant uncertainty for investors in the Democratic Republic of Congo’s (DRC’s) mining and natural resources sector.

However, it is anticipated that, through initiatives implemented by DRC President Félix Tshisekedi, investors might become more comfortable, says law firm Beech Veltman CEO Warren Beech.

The Revised Mining Code, promulgated in 2018, amended the 2002 Mining Code. The Revised Decree of June 8, 2018, was also introduced to support the Revised Mining Code, and both created significant uncertainty in the industry.

Attempts by the DRC government to clarify the interpretation and application of the Revised Code, through the publication of an annotated version of the Revised Code, were not successful – the annotated version, in many instances, restated the content of the Revised Code as opposed to providing clarification or interpretation.

Therefore, the annotated version of the Revised Code, published in July 2020, did not allay investors’ fears. These include the reduction of stabilisation periods from ten years to five years – calculated from 2018 when the Revised Code came into force and effect – as well as the “supertaxes” and increased royalties for strategic minerals such as cobalt.

“The changes to the Revised Code and the Revised Decree did not go down well with investors, and the ongoing disputes add to uncertainty,” says Beech.

He adds that the ability to repatriate money from the DRC is critical to any investment decisions, and disputes around the ability to get money out of the country have made many investors extremely nervous.

The Revised Code makes extensive provision for decisions based on the discretion of the decision-makers, which investors do not like.

Fortunately, Tshisekedi’s initiatives address a multitude of challenges impacting on the DRC mining industry, including corruption, transparency in relation to mining and prospecting rights, and the consistent application of the Revised Code, including in respect of government-carried interests.

Beech notes that Tshisekedi has already implemented various reforms – such as more efficient revenue collection, and government’s publishing mining contracts, which were previously kept secret – which have mitigated some of the concerns regarding the Revised Code and the Revised Decree.

Further, the board of State-owned mining company Gecamines has also been replaced.

Meanwhile, increased global demand for the minerals prevalent in the DRC will likely contribute to longer-term sustainability of the mining sector in the DRC, says Beech.

The DRC is in a unique position to benefit from the copper and cobalt boom, and

can benefit significantly, provided it succeeds in attracting investors and alleviating their concerns.