Conflict looms between Congo and mining companies

Subject

Congo's new mining code.

Significance

After five years of deliberation, Congo’s parliament on January 27 adopted new legislation regulating the all-important mining sector. If signed by President Joseph Kabila, the sweeping overhaul will raise royalties, introduce new taxes and remove existing investor protections. International mining companies are planning to fight back, but the government appears unwilling to yield, betting on Congo’s position as the world’s largest source of cobalt.

Impacts

• The authorities could threaten or execute expropriation of a major project to demonstrate their seriousness.
• New projects might be suspended or shelved.
• Investors might increase contacts with Kabila’s political opponents to raise pressure on the embattled president.
• The removal of investor protections will damage already-fragile confidence in Congo’s wider business environment.