Vedanta to exclude base metals business from sweeping demerger
The group said it will consider the base metals business demerger at a later stage.
Shares in Canada’s Ivanhoe Mines fell sharply on Wednesday after lawmakers in the Democratic Republic of Congo, where Ivanhoe is advancing two major projects, voted in favour of new mining laws that immediately lifts a provision which exempted licence holders from compliance with the new code for 10 years.
Ivanhoe Mines, headed by billionaire mining financier Robert Friedland, ended down 11.3% on the Toronto Stock Exchange on Wednesday, not far off its lows for the day.
The Vancouver-based company, worth C$2.8 billion after the day’s losses, is in partnership with China’s Zijin Mining on the Kamoa-Kakula copper deposit in the Central African nation. Kamoa-Kakula is considered the largest high-grade copper project in development globally with a copper resource of more than 30m tonnes.
Ivanhoe is also building a new operation at Kipushi, a past producing zinc-copper mine in partnership with Congo’s state-owned Gécamines. Ivanhoe’s most advanced project Platreef platinum is located in South Africa.
Firms operating inside the country which includes Glencore, Randgold Resources, China Molybdenum, Eurasian Resources Group, MMG and others will immediately be subjected to higher royalties on metals including copper, cobalt and gold, as well as a new 50% tax on so-called super profits.
Super profits are being defined as income realized when commodity prices rise 25% above levels included in a project’s bankable-feasibility study. Given the improvement in the price of most metals over the past couple of years – copper is up 67% since January 2016 and zinc +130% – having to deal with the new levy is more than just a possibility.
6 Comments
minedoubt
welcome to mining in a banana republic. everyday a new adventure.
Ralph de Bolster
Who was talking about shithole countries again?
Michael Alyoshin
Think twice, when set the commodity price for feasibility study…especially in Congo.
patentbs
If you want to do business in DRC – I sell any shares I hold. That is also true for most of the African nations. You just can not trust them!
deedub93
Sad thing is the normal Congolese people will see no benifit at all from this, no roads, no schools, no hospitals, no electricity, no clean water. The money will go straight into the ruling classes pockets. Mining companies have to provide all aminities for the local communities in order to have a healthy, educated work-force. Like many African countries, the DRC would have been better off remaining as a colony.
It was interesting the reaction of my Congolese friends and colleagues to the Trump ‘shithole’ comments. I expected them to be offended but their opinions shocked me. ‘Trump is right’ was the general consensus. ‘Thank god someone is speaking out, it raises the possibility of someone doing something about it’. You have to feel for these guys.
Himagain
DRC breaks the deals on which very large investment decisions were made.
Do they not know that behavior causes accidents like car and plane crashes?
…and/or, perhaps, financial and military support for more business friendly political opponents?