Insight

Democratic Republic of Congo - Impact of the Proposed Mining Code Changes

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Report summary

In late January 2018, the parliament of Democratic Republic of Congo (DRC) passed a new law that proposed a substantially revised Mining Code. Among a raft of proposed changes, the most pertinent to the copper producers in the DRC are the following clauses: Royalties to be increased from 2% to 3.5% for non-ferrous and base metals and from 2.5 to 3.5% for precious metals and calculated on the gross market value of the products; Creation of a special 10% royalty on minerals deemed by the State to be 'strategic substances', the list of such substances to be determined by the upcoming application texts; Creation of a special 50% tax on 'excess profits', defined as profits made when a commodity exceeds by 25% the price used in the Bankable Feasibility Study. This Insight report examines the implications for the copper mining industry in the DRC.

What's included

This report contains

  • Document

    Democratic Republic of Congo - Impact of the Proposed Mining Code Changes

    PDF 567.31 KB

Table of contents

  • Executive Summary
  • Copper royalty rise has limited impact, 10% cobalt royalty provides C3 disturbance
  • Excess profits tax delivers excessive C3 uplift
  • Comparing DRC C3 costs against global mine costs
  • Positive DRC cost curve movement eroded
  • Country competitiveness challenged, DRC cost quartile positioning slides
  • Conclusions

Tables and charts

This report includes 9 images and tables including:

Images

  • Cobalt demand and Cobalt LME price
  • DRC C3 potential cost change with the new Mining Code royalties applied
  • DRC C3 cost change with new Mining Code royalties and Excess Profits Tax applied
  • Global C3 cost comparison against DRC assets 2018-2025
  • Global C3 cost comparison against DRC assets 2018-2025, with excess profits tax impacts shown on average of only those mines affected
  • Global C3 cost comparison against DRC assets 2015-2025
  • 2017 C3 country cost curve, showing DRC position against other global copper producers
  • Forecast 2019 C3 country cost curve, prior to Mining Code changes, showing DRC position on the global copper cost in the first quartile of producers by country
  • Forecast 2019 C3 country cost curve, with Mining Code changes implemented. DRC pushed from first to fourth quartile on the country cost curve

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