Dont know if this has been posted yet, but found this on my bloomberg terminal news. Doesnt make mention of lithium, but thought it might be worth sharing.
Wire: Bloomberg News (BN) Date: Jan 31 2018 23:24:43
Miners Face Sudden Cost Increases After Congo Law Overhaul (1)
By William Clowes and Tom Wilson
(Bloomberg) -- The Democratic Republic of Congo canceled
contract guarantees and hiked a key royalty in sweeping last-
minute changes to a mining law that will have immediate
financial costs for every mining project in the country.
The country’s parliament finalized a revised mining code on
Jan. 27, after both the lower and upper houses introduced
increasingly onerous fiscal and regulatory reforms to already
contested legislation. The modifications significantly raise the
cost of doing business for investors in Africa’s biggest copper
producer, while boosting the state’s share of mining revenue.
Lawmakers went ahead with the changes even after Glencore
Plc Chief Executive Officer Ivan Glasenberg met Congolese
President Joseph Kabila to discuss the proposed law.
In the most dramatic overhaul, lawmakers overrode a measure
in the previous law adopted in 2002 that protected license
holders from complying with changes to the fiscal and customs
regime for 10 years. That means mines run by companies including
Glencore, Randgold Resources Ltd. and Ivanhoe Mines Ltd. will
immediately be subjected to higher royalties on metals including
copper, cobalt and gold, as well as a new 50 percent tax on so-
called super profits -- income realized when commodity prices
rise 25 percent above levels included in a project’s bankable-
feasibility study.
‘Strategic Substance’
The new code also permits Congo, the world’s biggest source
of cobalt, to raise the royalty on that metal to 10 percent from
2 percent if the government categorizes the mineral as a
“strategic substance.” A byproduct of copper and nickel, cobalt
has become a coveted commodity as its efficiency conducting
electricity has made it essential for rechargeable batteries
used in electric cars.
All that remains for the law to be enacted is Kabila’s
signature. While mining companies say they will lobby the
president to walk back the reforms, he could sign the law before
the end of next week, according to Evariste Mabi Mulumba, the
president of the Senate’s economics and finance commission.
Patrick Kakwata, the president of the National Assembly’s
natural resources commission, said Kabila will sign the
legislation “at his discretionary power.”
Glasenberg Meeting
After five years of on-off negotiations with the mining
industry, lawmakers chose to overlook the private sector’s
concerns in a move likely to rock Congo’s relations with its
biggest investors. Last month, miners including Glencore,
Randgold and China Molybdenum Co. sent a letter to the
presidents of the two houses of parliament asking them to
suspend the adoption of the new code and promising they would
defend their investments “by all domestic and international
means at their disposal.”
In a last ditch move, Glencore CEO Glasenberg flew to Congo
last month to meet with Kabila, according to two people with
knowledge of the meeting. Even Glencore, which says it will mine
as much as 500,000 metric tons of copper next year -- about a
third of Congo’s production -- was unable to talk the president
down, the people said, asking not to be identified because the
meeting was private.
Glencore, Randgold, Ivanhoe and China Moly, which runs the
Tenke Fungurume copper-cobalt mine, declined to comment. Simon
Tuma-Waku, vice president of Congo’s chamber of mines, said the
business federation would react after Kabila promulgates the
law.
The instant application of the new measures appears to have
come as a surprise to Congo’s mining industry. The tax increases
“can in no way affect the current titleholders before the expiry
of a 10-year period from the planned revision,” according to a
statement published by Glencore, Randgold, Ivanhoe and MMG Ltd.
on Dec. 11.
New Requirements
Tenke, Congo’s second-biggest copper mine, was acquired by
China Moly and a Chinese private equity partner last year for
$3.8 billion. The project operates under a contract that
predates the 2002 code and wasn’t previously bound by
legislative changes, but the new law requires all so-called
“mining conventions” to comply with its provisions.
Two previous versions of the law, passed by the National
Assembly on Dec. 8 and the Senate on Jan. 24, proposed imposing
only the new royalty rates from the outset, but otherwise retain
the decade-long exemptions. The decision to go further was taken
by a joint committee of both houses of parliament, which was
convened last week to iron out the divergence between the two
documents.
Peter Grauer, the chairman of Bloomberg LP, is a senior
independent non-executive director at Glencore.
To contact the reporters on this story:
William Clowes in Kinshasa at [email protected];
Tom Wilson in London at [email protected]
To contact the editors responsible for this story:
Lynn Thomasson at [email protected];
Antony Sguazzin at [email protected]
Paul Richardson, Liezel Hill
-----------------------------====================------------------------------
Copyright (c) 2018, Bloomberg, L. P.
################################ END OF STORY 1 ##############################
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