African Mining June 2021 | Page 19

COUNTRY IN FOCUS •

Artisanal mining still plays a significant role in the DRC economy .

Revised Decree of 8 June 2018 , was published , which amended and supplemented the previous Mining Decree of 26 March 2003 .

The Revised Code and the Revised Decree brought in sweeping changes and , like the changes to the mining laws in Tanzania , seemed to be an attempt to satisfy growing calls for the implementation of laws which supported nationalism , aimed at ensuring that the citizens of the DRC , benefit more from the extraction and beneficiation of the DRC ’ s natural resources . Calls for nationalism , and even nationalisation of natural resources , is not new – most , if not all African countries with vast natural resources , face pressure from citizens to ensure that benefits flow from the extraction and beneficiation of natural resources to the citizens .

The changes to the Revised Code and the Revised Decree did not go down well with investors , and there are still ongoing disputes , which are a stark reminder of how things can change from day to day , depending on who is in power .

The Revised Code and the Revised Decree are ostensibly aimed at promoting the interests of the DRC and its citizens , by making provision for flow of more revenue to the fiscus ( with the natural consequence that non-DRC companies and investors receive less revenue ).

This approach works when prices for minerals are relatively high , and the mining operations are profitable . As soon as mineral prices drop , or the costs of mining increase substantially , this impacts on the viability of mines , and impacts investment decisions , more generally .

The amendments to the Revised Code and the Revised Decree were made at a time when mineral prices , particularly for copper , cobalt , and gold , were higher , and many existing operations in the DRC , and new investors , took a pragmatic approach . However , this has not remained the situation , and amendments such as

increased royalty rates , the ability to declare certain minerals as strategic minerals ( with further , increased royalties ), and restrictions on free flow of funds in and out of the DRC have made investors extremely cautious . This has been exacerbated by the uncertainties surrounding local ownership and indigenisation requirements – at this stage it is unclear whether these requirements apply to the issuing of new rights to mine only , or to rights to mine which were issued , before the 2018 changes .

Despite the policy and regulatory uncertainty , world demand for battery minerals , and ‘ safe haven ’ minerals such as gold , means that there are always likely to be investors with a greater risk appetite , and despite investor concerns , the DRC is likely to continue benefitting from investment .

Investors are however likely to place significant pressure on the government of the DRC to address key concerns such as the policy and regulatory uncertainty , challenges around illegal mining being conducted by artisanal miners , and of course , the Covid-19 pandemic .

What is required of President Felix Tshisekedi is to provide investors with some form of stability , and the starting point would be to reextend stability arrangements to at least ten years , as opposed to the five-year period as set out in the Revised Code and the Revised Decree , together with an unequivocal indication regarding when the stability period begins to run . Investors generally invest more readily where stability is provided for a period that is clear . •

Warren Beech is CEO of Beech Veltman Incorporated .