February 7, 2018 / 6:34 AM / 5 months ago

UPDATE 3-Congo minister declines to say whether new mining code signed into law

(Adds Ivanhoe official comment)

By Barbara Lewis

CAPE TOWN, Feb 7 (Reuters) - The Minister of Mines for Democratic Republic of Congo, Martin Kabwelulu, declined on Wednesday to say whether President Joseph Kabila had signed a new mining code into law that the industry opposes because it will raise royalties and taxes.

The new code, which parliament approved late last month, could see royalties on cobalt, a vital component in electric car batteries, increase five-fold to 10 percent. It also removes a stability clause in the current law protecting miners from changes to the fiscal and customs regime for 10 years.

"Journalists ask me whether the president has promulgated the code. I won't answer that question here. The code is with the president," Kabwelulu told reporters and mining executives at a conference in Cape Town.

International mining companies in Congo, which include Randgold, Glencore, China Molybdenum and Ivanhoe, have said they will challenge the new law through international arbitration and are lobbying Kabila not to sign it.

Congo is the world's biggest source of cobalt and Africa's largest copper producer. The industry-led chamber of mines said on Wednesday that copper production rose 6.9 percent in 2017 to 1.09 million tonnes, while output of cobalt jumped 15.5 percent to 73,940 tonnes.

Gold production rose 2.7 percent to 23,270 kg, the chamber said.

Low commodity prices in recent years hit Congo's resource-dependent economy hard, causing inflation to swell to more than 50 percent in 2017, and the government is desperate to increase its revenue.

The country's state mining company said this week that it intended to start renegotiating contracts with its international partners to boost its share of revenues.

Kabwelulu on Wednesday likened the new code to a "bush fire", saying: "The fire is not going to destroy everything. There are plants that will keep their roots. New plants will grow."

Speaking after him, Randgold's Chief Executive Officer Mark Bristow urged the government to return to the negotiating table: "We can dance around, we can ignore the elephant in the room. Or we can find a real, proper solution for the DRC and its people."

Ivanhoe Executive Chairman Robert Friedland, whose company is developing one of the world's largest high-grade copper projects in southeastern Congo with China's Zijin Mining , said he believed a compromise could still be reached if stability clauses were respected.

"I am happy to pay higher royalties. I'm not concerned about the level of taxation. That's not the fundamental issue," he said. "The issue is that mining requires stability. We just can't get there from here without stability."

Pressed by reporters on the possibility of a new compromise, Kabwelulu would only say that the code had gone through all the necessary stages and was now with the president. (Additional reporting by Zandi Shabalala; Writing by Aaron Ross, Editing by Christian Schmollinger and Louise Heavens)

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