Gold steadies as traders weigh outlook for Fed rate cuts
Bullion traded near $2,626 an ounce in thin trading after closing 1.1% higher on Friday.
Canadian billionaire Robert Friedland, founder and executive chairman of Ivanhoe Mines (TSX:IVN), has joined the debate over the Democratic Republic of Congo’s imminent hike to mining taxes by saying his company would pay higher royalties and taxes, but only if that money benefits locals.
The Vancouver-based company, which is developing the Kamoa-Kakula copper deposit in the Central African nation in partnership with China’s Zijin Mining, told investors attending a mining conference in Cape Town that he was not opposed to updating the country’s 16-year-old mining code.
However, he said the mining industry needed stability, transparency and prove the new taxes collected by Congo goes to “develop, help and empower local people.”
Founder Robert Friedland said he didn’t mind paying a higher royalty as long as it goes to develop, help and empower local people.
“I’m not concerned about the level of taxation, that’s not the fundamental issue,” he said according to FT.com. “The issue is the mining industry needs stability and we absolutely need transparency.”
Ivanhoe is also building a new operation at Kipushi, a past producing zinc-copper mine in partnership with Congo’s state-owned Gécamines. The company’s most advanced project, however, is Platreef platinum, located in South Africa.
The revised mining code, approved by the country’s parliament last week, would increase copper royalties from 2% to 3.5%, creating also a 50% “super-profits” tax if commodity prices rise much faster than expected.
But what really has miners up in arms against the new rules is a move to eliminate a clause that would have protected resources companies present in the country from tax increases for 10 years.
While the legislation has yet to be signed into law by President Joseph Kabila, some such as Congo’s state-owned miner, Gécamines, are already seeking to take advantage of the new rules.
Last week, the miner said it would revise all contracts with its international partners, claiming the old rules meant those firms benefitted more from the country’s riches than Gécamines itself.
Revisions should to start in the second quarter and be completed by the end of this year or beginning of 2019, it said.
Other international mining companies operating in Congo include Glencore, Randgold Resources, China Molybdenum, Eurasian Resources Group, and MMG. All of them have already seen their shares dive in the last week and said they will challenge the new law through international arbitration while they lobby Kabila not to sign it.
The nation is world’s main supplier of cobalt, a key component in the lithium-ion batteries that power electric cars and mobile phones, and Africa’s largest copper producer.
6 Comments
tidal pool
Pretty colonial dictating what the Congolese do with their mining royalties. Face it Mr. F., they can do whatever they want with the money, they are a sovereign country, and you have no say. Presumably they can also read the papers and see that cobalt is going through the roof in price ($US 37 per lb). since they produce almost twice as much as the rest of the world combined and Co is in high demand for batteries, it seems like DRC can do just about anything they want.
Brenda Dalglish
Don’t believe Mr Friedland has much too concern for the local people but here’s hoping that he can have some influence in the Congo
patentbs
When the nation is looking for a company to spend big dollars they promise almost anything. Then after the commitment is in place they want o change the rules because it is their backyard. Investment decisions are based on the conditions today and not what may be in the future. In any nation with ‘Democratic’ in the name you need a huge potential return to cover the political risk.
Roger Rumbu
When you want to do business in a country, you had better to abide to its rules. This position from Ivanhoe boss will be difficult to hold in front of officials. Mining code is a law and like in any country, you have to face it or make it changed….. if you can. https://www.amazon.com/Introduction-Mining-Business-Projects-Roger/dp/1541066359
CAPLD
Ivanhoe is right because the local people have never benefited from the tax imposed by the current government. A country very rich when natural resource is concerned, yet very poor than any country on earth. A country without laws, the laws are only for the common man on the Street. Imagine, Congo is the main world supplier of cobalt a key component in the lithium-ion batteries that power electric cars and mobile phones yet there is no light on the Street of Congo. I strongly agree with Ivanhoe and I believe Kabila most live the presidency since is terms are over!
Moses Mondowa
I would agree with Robert Friedland, in the context of local benefit; and also I wish to suggest him to invest in Aiabba Minerals, an exploration firm current locally owned focused for listing with a property located 100km east of the Frieda River (20M OZ & 13MT Cu) deposit in Papua New Guinea.