Congo's Katanga Miners Protest Ban, Tax on Copper and Cobalt -Shanghai Metals Market

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Congo's Katanga Miners Protest Ban, Tax on Copper and Cobalt

Industry News 08:54:09AM May 19, 2010 Source:SMM

May 18 (Bloomberg) -- Mining companies in the Democratic Republic of Congo's Katanga province say they are paying a new tax on exports of unrefined copper and cobalt ore under protest.

The government began prohibiting the export of unrefined minerals on April 8 to encourage companies to refine them in the Congo. The Mines Ministry wants to boost its revenue from the greater value of refined copper and cobalt. The governor of Katanga signed a law on April 20 allowing companies to export concentrated minerals if they paid a tax of $60 a metric ton.

Both the ban and the tax are contrary to Congolese mining code, the companies say. Miners such as Freeport McMoRan Copper & Gold Inc.'s Tenke Fungurume Mining Sarl are paying the tax under protest and plan to seek to recoup their money, said Eric Monga, president of the mining sector of the Katanga chapter of the La Fédération des Entreprises du Congo, or FEC.

Paying the tax "was a bad compromise to resolve the block on our products," Monga said by phone on May 14 from Lubumbashi, Katanga's capital. FEC lodged a formal protest of the ban with the Ministry of Mines on April 15.

Congo holds 4 percent of global copper reserves and is among the world's largest producers of cobalt, according to the U.S. Geological Survey.

The mines ministry says there may be contradictions between the ban and tax and has convened a commission "to harmonize the laws," Dona Kampata, head of the ministry's technical committee for planning and coordination, said in a May 10 interview in Kinshasa, Congo's capital.

Higher Prices

"The companies make so much more from the higher prices, that's why they've said in Katanga you have to pay $60 a ton for concentrate," he said.

Congo wants to triple its mining revenue this year to almost $90 million after lower prices caused by the global economic crisis forced more than 40 miners to suspend operations in the country, according to the African Development Bank.

Copper for delivery in three months rose 2.4 percent to $6,626 a metric ton as of 10:57 a.m. on the London Metal Exchange. The price of the metal declined to as low as $2,817.25 a ton on Dec. 24, 2008.

"Each time the state needs money, they change the law," the FEC's Monga said. "We're against that philosophy."

Congo's 2002 Mining Code has a 10-year stabilization clause that requires an act of parliament to change it, according to FEC.

'Respecting The Law'

"Respecting the law is the best thing they could do," Monga said. "Companies will produce if the state respects the law and if they don't, they'll do nothing."

The FEC says it's unclear which products are subject to the ban and tax. Miners that produce a metallic form of copper and cobalt haven't paid the fee, while Freeport's $1.8 billion Tenke Fungurume copper-mine project is paying the tax on its cobalt hydroxide.

"We are paying a fee on our cobalt hydroxide exports but expect to resolve this matter with the government," Freeport spokesman Bill Collier said on May 11 in an e-mailed response to questions. "We do not believe the new export fee should apply to TFM under the terms of our mining convention."

Cobalt hydroxide is not included in the ban and should not be taxed, Kampata said. Tenke is not paying a tax on its copper cathodes.

 

Congo's Katanga Miners Protest Ban, Tax on Copper and Cobalt

Industry News 08:54:09AM May 19, 2010 Source:SMM

May 18 (Bloomberg) -- Mining companies in the Democratic Republic of Congo's Katanga province say they are paying a new tax on exports of unrefined copper and cobalt ore under protest.

The government began prohibiting the export of unrefined minerals on April 8 to encourage companies to refine them in the Congo. The Mines Ministry wants to boost its revenue from the greater value of refined copper and cobalt. The governor of Katanga signed a law on April 20 allowing companies to export concentrated minerals if they paid a tax of $60 a metric ton.

Both the ban and the tax are contrary to Congolese mining code, the companies say. Miners such as Freeport McMoRan Copper & Gold Inc.'s Tenke Fungurume Mining Sarl are paying the tax under protest and plan to seek to recoup their money, said Eric Monga, president of the mining sector of the Katanga chapter of the La Fédération des Entreprises du Congo, or FEC.

Paying the tax "was a bad compromise to resolve the block on our products," Monga said by phone on May 14 from Lubumbashi, Katanga's capital. FEC lodged a formal protest of the ban with the Ministry of Mines on April 15.

Congo holds 4 percent of global copper reserves and is among the world's largest producers of cobalt, according to the U.S. Geological Survey.

The mines ministry says there may be contradictions between the ban and tax and has convened a commission "to harmonize the laws," Dona Kampata, head of the ministry's technical committee for planning and coordination, said in a May 10 interview in Kinshasa, Congo's capital.

Higher Prices

"The companies make so much more from the higher prices, that's why they've said in Katanga you have to pay $60 a ton for concentrate," he said.

Congo wants to triple its mining revenue this year to almost $90 million after lower prices caused by the global economic crisis forced more than 40 miners to suspend operations in the country, according to the African Development Bank.

Copper for delivery in three months rose 2.4 percent to $6,626 a metric ton as of 10:57 a.m. on the London Metal Exchange. The price of the metal declined to as low as $2,817.25 a ton on Dec. 24, 2008.

"Each time the state needs money, they change the law," the FEC's Monga said. "We're against that philosophy."

Congo's 2002 Mining Code has a 10-year stabilization clause that requires an act of parliament to change it, according to FEC.

'Respecting The Law'

"Respecting the law is the best thing they could do," Monga said. "Companies will produce if the state respects the law and if they don't, they'll do nothing."

The FEC says it's unclear which products are subject to the ban and tax. Miners that produce a metallic form of copper and cobalt haven't paid the fee, while Freeport's $1.8 billion Tenke Fungurume copper-mine project is paying the tax on its cobalt hydroxide.

"We are paying a fee on our cobalt hydroxide exports but expect to resolve this matter with the government," Freeport spokesman Bill Collier said on May 11 in an e-mailed response to questions. "We do not believe the new export fee should apply to TFM under the terms of our mining convention."

Cobalt hydroxide is not included in the ban and should not be taxed, Kampata said. Tenke is not paying a tax on its copper cathodes.