DR Congo's Finance Minister Ponyo Mapon Matata

Governor of Congo mining hub Katanga warns against tax hike

The powerful governor of Democratic Republic of Congo’s Katanga province warned on Wednesday against significant tax hikes in a proposed new mining code amid a recent decline in copper prices.

The southeastern province accounts for nearly all of the vast central African state’s copper production, which surpassed one-million tonnes for the first time in 2014. Congo vies with Zambia to be the continent’s top producer of the metal.

A revision of Congo’s 2002 mining code proposed by the mines ministry has raised fierce objections from miners, who say that its tax and royalty increases would chase off new investment.

In an interview in the provincial capital of Lubumbashi, Moise Katumbi, who worked as a mining executive before becoming governor in 2006, criticised the Kinshasa central government for a lack of consultation with local officials and miners.

“I am a little scared because with the price of copper today, it wouldn’t be good to make the business climate less secure,” Katumbi said.

The mines ministry submitted a draft version of the new mining code to parliament in March but it has not yet been taken up. A representative of Congo’s chamber of mines said on Wednesday that Prime Minister Augustin Matata Ponyo has agreed to reopen discussions of the code with industry.

“We have to have a round table with miners and investors … to also see the other side,” Katumbi said.

Copper production has surged since the formal end of Congo’s 1998-2003 war. Output increased more than 12% last year, helping fuel GDP growth of 9.5%.

However, the world copper price hit a five-and-a-half-year low in January. Three-month LME copper dropped to its weakest level since late April at $6 075 on Wednesday.

In addition to copper, Congo is the world’s leading cobalt producer and also mines significant quantities of gold, diamonds and tantalum. Mining sector revenues account for close to one-fifth of the state budget.

Katumbi waved off questions about his political future amid intense speculation that he will run for president next year.

The vote, scheduled for November 2016, could herald Congo’s first ever peaceful transition of power with President Joseph Kabila – in office since 2001 – term-limited after winning disputed elections in 2006 and 2011.

Katumbi said he planned to spend more time with his family when he is forced to step down in the coming months as part of a decentralisation initiative that will see Katanga split into four new provinces.

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