Memorandum of Congolese Civil Society Organizations operating in the area of natural resources on the mining code revision

Augustin Matata Ponyo

FOR THE ATTENTION OF HIS EXCELLENCY, THE PRIME MINISTER, HEAD OF GOVERNMENT

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Confusion and contradiction around the revision process of the Mining Code

  1. Introduction

As of February 4, 2016, civil society Coordinating Committee on the Mining Code revision sent you an official letter which to this day, remains unanswered. This letter requested you to:  -

  1. reinstate the tripartite working group to allow the three stakeholders (Government, mining companies and civil society) to officially complete and give closure to the three year process of revision of the Mining Code; and to
  2. forward the draft law amending the Mining Code to Parliament.

By means of this memorandum, at the initiative of the undersigned Civil Society organizations operating in the area of natural resources in the DRC, we invite the Government to determine an opinion on the Mining Code revision process.

We, the undersigned are concerned about the contradictory statements from members of the Government. Besides the fact that they contribute to creating confusion on Government’s real intentions, civil society is concerned that these statements effectively conceal a decision already taken to abort the process of revising the Mining Code under the pressure from mining companies. Such an option, if valid, would be regrettable as it would void the laborious national consensus reached over three years of transparent and participative development on the project of the new Mining Code. In addition it would cause extensive and irreparable damage to the political economy and sovereignty of DRC.

  1. Observation and background

Indeed, your Excellency the Prime Minister, you are aware that the process of revising the Mining Code is the result of the political undertaking by the President made in his December 2011 inauguration speech. This, your expressed political intent was followed by several activities organized by the Government, mining companies and organizations of civil society operating in the area of natural resources for the success of this process. The World Bank was also invested by the funding of the process through PROMINES.

We civil society organizations are questioning the confusion resulting from the conflicting statements made respectively by:

  • The Minister of Mines, on February 10, 2016 at Indaba (RSA) announcing the abandonment of the revision process of the Mining Code by the Congolese Government, which was immediately followed by the rectification by himself and his Chief of staff.
  • The Minister of Economy, at the end of the strategic Troika meeting on February 15, 2016, taking note of the first position of his colleague of Mines, thus confirmed that government has abandoned the revision process of the Mining Code.

This ambiguity has delighted some mine operators opposed to any revision of the Mining Code.

This confusion was preceded by the withdrawal by Government of the Bill amending the Mining Code during the parliamentary session of March 2015, which was not followed by any consultation with other key stakeholders.

Your Excellency, The Prime Minister, we the undersigned Civil Society organizations, consider the reasons put forward to justify the abandonment of the process which cite fluctuations in metal prices on international markets to be unfounded. 

We the signatory organizations have examined the current context of the process, the reasons that led to the launch of this process by the Government in 2012, the work and achievements realized by the three parties to date, as well as the current international context of low commodity prices.

The mining sector is one of the major pillars of the national economy, but this sector offers very little benefit to the country and to the Congolese people. but the sector does not benefit the country and the Congolese people. The Mining Code of 2002 was developed under the leadership of the World Bank with very little involvement of national expertise. We as Civil Society wish to record our deep concern about the total silence of this institution in the light of the contradictions emanating from statements by Government.

  1. Perspectives of civil society

3.1 Economically:

a. The fall of mineral prices on the international market:

The fall of mineral prices is a temporary and random event that should not justify the discontinuation of the reform already initiated. Indeed, the average price of copper was approximately USD 1,588.6 per ton in 2002. Between 2002 and 2012, the price experienced a drastic increase over USD 8,000 per ton of copper. Since then, a ton of copper has never fallen below USD 3,000. The tax system did not undergo any changes during this period to reflect a positive fluctuation in mineral prices. This is the period during which most of the mining contracts were signed, while the stability clause (Art. 276 of the Mining Code) any possibility of revising the Mining Code. The situation is not any different in the gold sector. The IMF also acknowledged that the current Mining Code did not help the country to benefit from its mining sector; instead it helped investors to achieve significant gains.

Amendments to mining law should therefore not be dependent on fluctuations in metal prices, otherwise, this Act would need to be amended at each change of metal prices. We are sure your, Excellency would agree that this is not feasible as it would create legal insecurity both for the Congolese State and for investors.

b. Operational costs: illegal taxes, corruption and lack of electrical energy supply

Companies incorporate into the operational cost of mining projects different deductible expenses to pay mining royalties that significantly affect the value of the latter. All expenses, legal or not, are incorporated into economic patterns of mining companies which have very high operating costs, an argument put forward by mining companies to undermine the review of the mining code. This argument holds precisely given the failure to reform the Mining Code – and is therefore not a reason to abandon it but rather critically to ensure that it is revised to benefit the DRC and its people.

The argument of the energy deficit also mentioned by mining companies is not relevant due to the liberalization of the energy sector enabling each company to produce its own electricity.

We as Civil Society consider the urgent measures taken on January 26, 2016 during the 8th extraordinary meeting of the Council of Ministers to have tackled the administrative shortcomings in the management of the sector, but this that should in no way detract from the need (and opportunity) to address the legislative approach. In addition, these measures do not affect the relevance of consensus obtained through tripartite meetings, on the revision of the Mining Code and should not be questioned.

c. The question of duality on the mining regime

The duality on the mining regime (agreement and contract provided for by the Mining Code) creates an economic injustice, particularly in the gold sector. It is not acceptable that in the same conditions, some companies benefit from excessive exemptions without paying dividends to the people and the country, while others are subject to the payment of royalties and taxes. Such a contradiction can only be resolved by the law. Do we have to wait depletion of the resources before we could remedy this injustice? This is precisely one of the motivations to proceed with the ongoing reforms.

As civil society, we believe with certainty that the economic reasons provided for the abandonment of the revision process of the Mining Code, offer no convincing justifications whatsoever, and rather support the need to expedite and ensure that reform process sees completion.

3.2 Politically:

The argument of avoidance of creating several fronts is also one of the justifications for the abandonment of the revision process of the Mining Code.

It is true that the country faces upcoming elections, and that many legal, financial and security constraints of concern.

 However, what would be the use of undertaking political reforms without a sustainable economic security to support them? Revising the mining law is the sole prerogative of Parliament. Not doing it now is prolonging the bleeding of revenues in the sector which are needed to support our young democracy. It will also accelerate the depletion of our minerals which are non-renewable to which future generations are entitled without compensation. It is also clear that "all changes shall be applicable ten years after, with the exception of the mining royalty whose application is immediate, following the consensus of tripartite work”. It is, therefore, not useful, but indeed extremely destructive to reject the review of the Mining Code.

  1. Conclusion

In the light of everything that has just been outlined and considering the willingness expressed by the President of the Republic during his inauguration speech of December 20, 2011, taking into account also that the revision of the Mining Code was one of the key recommendations of mining conferences, in Lubumbashi in January 2013 and Goma in March 2014, we the civil society organizations operating in the natural resources sector, urge the Prime Minister to:

  1. Reinstate the revision process of the Mining Code by the referral of the draft law amending the Mining Code to Parliament for its consideration and adoption during the parliamentary session of March 2016;
  2. End the confusion, contradictions and prevarications that prevail within the Government team on the revision process of the Mining Code;
  3. Instruct the Minister of Mines in order for him to gather, as soon as possible, the concerns of civil society and mining companies in order to transmit them to Parliament for consideration;
  4. Desist from giving in to the pressure of mining companies which could result in the failure to reform the Mining Code knowing that they benefit greatly from the current mining code than the State and the Congolese population.

Issued in Kinshasa, on March 9, 2016.

For any information please contact:

Mr. Georges BOKONDU, Head of Office SARW-DRC, 3, avenue Révolution, quartier SOCIMAT, Kinshasa/Gombe, Tel: 0817070127

Mr. Henri MUHIYA, Executive Secretary of the CERN/CENCO, 59, Avenue Monts Virunga, Kinshasa-Gombe, Tel: 0810526141

 

Signatory Organizations:

Organization

Representative

Contact

01

AFREWATCH

Emmanuel Umpula

 

02

APRODEPED

Shamavu Emmanuel

 

03

BEST

Phillipe Ruvunangiza

 

04

Cooperation Framework of Ituri (CdCi)

Jimmy

 

05

Episcopal Commission for Natural Resources CERN/CENCO

Henri Muhiya

06

CNONG

Félicien Mbikayi

 

07

GAERN

Félicien Mbikayi

 

08

Justice for All (JPT)

Raoul Kitungano

 

09

Maisons des Mines des Kivus

Grégoire Kasadi

 

10

Observance Governance and Peace

Eric Kajenga

 

11

Observatory studies and support for social and environmental responsibility (OEARSE)

Freddy Kasongo

12

Organization coordinated of the Environmentalists and Friends of Nature (OCEAN)

Cyrille Adebu

 

13

Maniema Freedom (MALI)

Paul Kasongo

 

14

Platform of organizations of civil society in the mining sector (POM/Katanga)

Ibond Rupas

 

15

Natural Resources Network

Joseph Bobia

 

16

Southern Africa Resource Watch (SARW)

Georges Bokondu

 

17

CAFCO

Rose Mutombo

 

18

ASADHO

Jean Keba

 

19

Publish What You Pay Coalition

Jean Claude Katende

 

20

CENADEP

Dany Singoma

 

21

League Congolese to Combat Corruption (LICOCO)

Ernestre Mpararo

 

22

Action against Impunity and Human Rights (ACIDH)

Nicole Odia

 

23

Synergy for the Governance of Natural Resources (SGRN)

Adrien Dokisa

 

24

CEPECO

Jacques Bakulu

 

24

Natural Resources and Development (RENAD)

Nicole Bila

 

26

CEPAS

Patrick Mavinga

 

27

ASAPT

Symphorien Pyana

 

 

 

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