The Congolese government is seeking to exploit the recent surge in global cobalt prices by substantially raising taxes on the metal. Despite concerns over an increase in operational costs, the DRC has a virtual monopoly over global cobalt production, leaving international mining companies with little option but to concede to the sector’s new regulatory changes.
Tanzania’s mining sector appears to finally have a functioning governing body following the appointment of Idris Kikula as Chairman of the newly established Mining Commission. A subsequent resumption in the process of issuing mining licences and permits after an almost 10 months hiatus is expected to create more certainty in Tanzania’s mining industry and slowly restore investor confidence in the East African country.
Despite fierce opposition from international mining companies, the DRC has signed into law regulations to implement the country’s new Mining Code, which introduces several major fiscal and regulatory reforms. Pursuing a high risk, high reward paradigm, these reforms will have a serious impact on the DRC’s already weak investment environment.
The recent introduction of new mining regulations has created uncertainty within Tanzania’s banking sector, as the government attempts to further maximise the country’s economic benefits gained from its abundant natural resources by limiting the involvement of foreign-owned banks in mining-related businesses.
Uncertainty over recent changes to Tanzania’s mining laws and regulations has created an increasingly unpredictable operating environment within the country’s mining sector. While many western companies already operating in Tanzania remain reluctant to commit their future to such an uncertainty, China is exploiting emerging opportunities to gain entry into the country’s lucrative mining sector.
While it is widely agreed that the illicit practice of trade misinvoicing is costing African countries billions of dollars a year, the scale of the issue remains to be debated. It can be argued that the potentially over exaggerated estimates of misinvoicing in Africa being quoted by highly-respected and influential international institutions may in some cases be counterproductive, adversely affecting their investment environments.
The actors and transit routes involved in the DRC-Dubai gold trade raise suspicion; not least because estimates suggest that 70% of all DRC gold reaches Dubai. Those who stand to benefit may have little incentive to enforce a crackdown. Understanding the nuances of the DRC-Dubai trade route should be a priority for sector stakeholders.
In a matter of weeks, the introduction of three new laws has completely changed the legal and regulatory landscape of Tanzania’s extractives industry, risking the country’s reputation as one of Africa’s most attractive investment destinations. As Acacia has discovered, this emerging environment is not a welcome one.
With President Kabila and his close circle of allies retaining tight control over industrial mining in the DRC, it is vital that foreign investors learn how to navigate networks of exposed political elite and their various gatekeepers. Shadow Governance’s new report on mining in the DRC details the key power plays and power players.
Navigating the mining sector in the DRC remains a hazardous and sometimes complex prospect – depending on location and context, either political elite networks or armed groups have developed a monopoly over this lucrative sector.
A media campaign launched this month is putting pressure on the government of Ghana to crackdown on the lucrative illegal mining industry. Calls for new regulations and laws, however, will likley be met with resistance by Chinese stakeholders.
Keen to capitalise on the DRC’s natural resources wealth, MNCs have leveraged Dan Gertler’s elite contacts to gain access to mining rights.