Mining Snapshot – Democratic Republic of the Congo

By Serus Legal

The Democratic Republic of the Congo, or DRC, is known as the leading global producer of cobalt, but it also hosts a wide variety of world-class mineral deposits, including tin, gold, coltan, and copper with grades that greatly surpass global averages.

Despite challenges relating to infrastructure and security, operators continue to invest and maintain operational footholds in this lucrative environment. With only 11% of the national territory covered by mining activities, vast areas remain untouched by geological and mining research.

This insight focuses on the mining framework, governed primarily by the Mining Code of 2018.

Framework – The Mining Code of 2018 modified, but did not replace, the Mining code of 2002. While many of the changes were consistent with new mining laws adopted elsewhere in Africa, some attracted concern in relation to local participation requirements and the introduction of ‘strategic minerals’ as detailed below.

Mining Rights – Available mining rights include a 25-year mining permit, renewable for periods up to 15 years, and exploration permits for 5-year terms, renewable once for the same term. These permits are only granted to legal entities established in the DRC.

Participation – The DRC has no restrictions on international investment in the mining sector. Nevertheless, the State is granted a 10% free-carry shareholding in the mining company, increased by 5% each time the license is renewed. Further, at least 10% of the capital must be owned by Congolese citizens. Subject to a 1-year exemption, the exportation of raw minerals is forbidden, and miners must present a plan for the in-country refinement of their minerals to the authorities.

Contracting – Mining companies must engage Congolese contracting companies which are owned by Congolese shareholders. Further, in concluding services contracts (not including the sale of goods), priority must be given to Congolese companies and any such contracts with a foreign company are subject to a 14% tax.

Taxes – The code includes varying royalty rates including for non-ferrous metals (3.5%), precious metals (3.5%), and precious stones (6%). Furthermore, certain ‘strategic substances’ (minerals the government deems of critical importance in the international context) are subject to special royalties of 10%, which includes cobalt.  A minimum contribution of 0.3% must also be made to support local communities.

Why DRC? – With global demand for battery minerals expected to quadruple by 2040, the DRC is exceptionally well-placed to benefit from the demand and growth forecast in the mining industry. With global operators such as Glencore and Barrick already present for many years, it is only a matter of time before others follow in search of untapped resources, including many which occupy critical roles in the green energy revolution.

Why Serus? – Working in French and English, we operate alongside trusted partners in Kinshasa on a number of DRC-based projects. We help companies manage their structuring, project acquisition, and due diligence, and prepare all forms of mining agreements including joint-venture, royalty, earn-in, and EPC agreements.

Serus is an international law firm that uses technology and lower overheads to provide legal services at a significantly better value. Please contact our team or email felix@seruslegal.com

The contents of this insight do not constitute legal advice and are subject to input from a lawyer.