DR Congo's miners cast watchful eye on upcoming polls

Furious at the tax hike, foreign firms are also slamming the end of a 10-year stability clause for royalty taxes.

02 January 2019 | Economics

Most mining companies concerned by this change in the regulatory framework want to go to arbitration. – Anonymous source: DRC

Caroline Thirion - From small-scale diggers eking out their existence to corporations exposed to the market fluctuations of cobalt and legal reforms, DR Congo's massively important mining sector has a keen eye on the country's troubled election process.

Subsistence diggers scraping a living outside the mining capital of Lubumbashi said they hoped Sunday's long-delayed poll will bring political change and a better life.

"We have pinned our hopes on Martin Fayulu," said Prince, a 32-year-old miner referring to a candidate running against President Joseph Kabila's handpicked champion, Emmanuel Ramazan Shadary.

Prince and colleague Kalumba, 24, hammered at the rock, seeking to tease out enough cobalt to earn a few dollars off intermediaries.

Both are among the roughly two in three Congolese who live below the poverty line, seeing almost nothing of their country's vast natural riches - a wealth that includes gold, uranium, diamonds and copper.

Cobalt

The big star at the moment is cobalt, the vital ingredient in batteries for electric cars, mobile phones and other glitzy devices, and the DRC is the world's biggest exporter of the stuff.

Cobalt soared to US$94 800 per tonne in May.

It has since slumped to US$57 000 per tonne, although this is still more than twice the price level seen in mid-2016.

The current level is "not too bad," said Ghislain Yumba, head of business development at Chemaf, a cobalt miner in Lubumbashi.

"We think cobalt can stay at this level for the coming two to three years - it's not so alarming," he said.

The government classified cobalt as a "strategic" mineral under mining code reforms passed in early 2018, one of outgoing President Joseph Kabila's final economic projects.

The reforms will beef up the state's take on the coveted mineral, hiking taxes on production to 10% from 2.5%.

"That will have a knock-on effect," says Yumba. "But the current price level still allows us to face up to that."

Foreign firms

But foreign firms operating in the DRC, including Anglo-Swiss behemoth Glencore, are less happy.

Furious at the tax hike, foreign firms have also slammed the end of a 10-year stability clause for royalty taxes.

"Relations between the miners and the government are not at all good," a sector expert told AFP.

"Most mining companies concerned by this change in the regulatory framework want to go to arbitration. But then they get threatened with having their operating licence taken away," the source added.

Before junking the stability clause, Kabila "used to want to defend the mining sector," the source lamented.

The industry now hopes a new political regime will be more sympathetic to its worries about profitability, the source said.

Agriculture

Another sector with its eyes on post-electoral change is agriculture.

Barely 10% of some 80 million hectares of arable land is cultivated.

"Our land is among the most fertile in the world," the governor of Tanganyika boasted to journalists visiting his southeastern region last March.

Yet humanitarian groups say some seven million people lack sufficient food in a country where subsistence farming is the norm and which is a net importer of foodstuffs.

Shadary has promised to make the sector a pillar of the economy while Fayulu has promised an "agricultural state of emergency" to ensure that "in a year no Congolese dies of hunger."

But such promises are viewed sceptically in a country where corruption and government inertia are rife.

Four years ago, Kabila inaugurated a 75 000-hectare agro-industrial park in a South African partnership at Bukanga Lonzo, 220 km east of Kinshasa.

But production ground to a halt earlier this year after the South African contractor pulled out and launched a US$20 million legal claim in Paris against the government.

Sector workers cite a chronic lack of farm equipment as an additional problem, as well as violence.

In Beni, in northeastern North Kivu province, "hundreds of agricultural workers are paralysed by fear of getting killed by armed groups to the extent they refuse to go and cultivate their fields," the DR Congo office of the Norwegian Refugee Council said after a recent spate of attacks targeting workers. – Nampa/AFP

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