Which US presidential candidate does gold prefer?
Gold loves chaos and should be hitting new highs, especially with inflation coming down and with it, two rate cuts likely before year’s end.
The Democratic Republic of Congo’s intentions to increase the government stake in mining projects by 35% will first be discussed with mining companies, the World Bank and the IMF, a source from the country’s ministry of mines told Reuters on Wednesday.
Mines Minister, Martin Kabwelulu, announced last month that a proposed reform of the country’s mining code would seek to raise the state owned stakes from the current 5% to 35% or more.
The proposal, reported by Bloomberg News, upset foreign miners with operations in the central African nation and had to be later clarified by the authorities. In an interview with Reuters, Kabwelulu said the DRC government would not apply the mining code changes, if implemented, retroactively.
Mining controversy is not foreign to the DRC.
Last June Kabwelulu went on the defensive about allegedly granting mining licenses to companies with close connections to the government, qualifying those accusations as uninformed and a “double standard.”
He said that the government had not benefited some firms over others, as a report from Global Witness exposed.
According to that organization, Eurasian Natural Resources Corporation (LON:ENRC), one of the largest mining groups listed on the London’s stock exchange, acquired stakes in mining concessions at prices that delivered considerable – and quick – profits to an Israeli businessman with links to the DRC government.
The country’s resource sector had already been thrown into turmoil in February with the death of the country’s go-to mining guy.
Congo is the world’s number one cobalt producer and it also holds vast deposits of diamonds, copper, tin and gold.
The DRC is the sixth largest producer of diamonds behind No. 1-ranked Botswana and followed in descending order by Russia, Australia, Canada and South Africa according to 2009 figures by Geology.com. The country produced 5.2 million carats that year, compared to Botswana’s 32 million.
The nation is among a number of developing countries trying to increase revenue from their mineral wealth by increasing taxes and the state’s share in profits.
Image: A Congolese girl concentrates on her assignment © UNESCO/M. Hofer, via EFA Report
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2 Comments
Anthony,
Yes!African countrie must have a good chunk from its non renewable minerals for sake of its devellopment and poverty eradication! money might be re printed, but ,minerals cannot be recreateded!
DRCGirl1997
@Jamasmie,
You fail to mention whether revenues from the taxes will trickle down and be used to invest in better working conditions, infrastructure, employment opportunities for qualified Congolese in the region. Changes in the mining code will only benefit the known corrupt government of the DRC. Corruption/Bribery is costly – for the population & for mining companies. Pressure from these mining companies on the DRC govt for transparency will make it easier for them to do business in DRC & will allow them to employ a well educated workforce. In addition, with better transportation & communications systems, mining companies can optimize their operational costs. Otherwise, they will be faced with regulations like these. By continuing to allow the DRC government’s behavior, they are shooting themselves in the foot. Not only will they benefit from a truly growing economy measured by economic development (infrastructure, education level, health standards-not just income), but so will the people of DRC. The DRC government will be forced to change. It takes one…