Congo May Introduce “Use It or Lose It” Principle for Mining
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By Paul Richardson
Feb. 11 (Bloomberg) -- The Democratic Republic of Congo may introduce a “use it or lose it” principle for future mining contracts as part of an effort to unlock the country’s mineral wealth, deputy Mines Minister Victor Kasongo said.
The Central African nation is seeking a mechanism to encourage mining companies to develop mineral rights they have acquired, Kasongo said in an interview today at the Mining Indaba conference in Cape Town. Those companies that aren’t able to access finance to exploit resources may have to find partners that can, he said.
“We are so determined about mining,” Kasongo said. “We can’t afford to have key mining assets frozen.”
Congo, which has a third of the world’s cobalt and 4 percent of all copper, wants to develop its mining industry to rebuild an economy shattered by two civil wars between 1996 and 2003 and in which more than 5 million people died. The country is completing a review of mining contracts with companies including Freeport McMoRan Copper & Gold Inc., AngloGold Ashanti Ltd. and First Quantum Minerals Ltd.
“The mining review was never about taking assets, it was about looking at the terms of contracts,” Kasongo said. “The review also wasn’t about security of tenure - security of tenure is there.”
Congo’s government sought a larger share of profits as metals prices soared and investors became less concerned about local risk following elections in 2006, the first democratic vote in four decades. Some projects that had struggled to find financing while uncertainty remained over their titles were cut back as the world financial crisis set in last year.
Mining Laws
South Africa, the world’s largest platinum producer, in 2004 introduced a law forcing companies to give up deposits if they didn’t produce plans to develop mines. Congo may introduce such a measure, although any law that is implemented won’t be “aggressive,” Kasongo said.
“We are considering something similar, but if mining is going on, we won’t need to do that,” he said.
While Congo’s government is unable to assist companies in raising finance to start mining projects, state-owned enterprises are prepared to help by funding the construction of roads and power supply facilities, Kasongo said.
“We have to make every effort to get production going,” he said.
To contact the reporter on this story: Paul Richardson in Cape Town at pmrichardson@bloomberg.net.
Last Updated: February 11, 2009 03:42 EST
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