DRC postpones ban on export of copper and cobalt concentrates
Jonathan van Kempen
and Fulgence Kalema Bwatunda.
On April 5, 2013, the Minister of Mines of the Democratic Republic of the Congo (“DRC”), jointly with the Minister of Finance, enacted Inter-Ministerial Decrees No.122/CAB.MIN/MINES/01/2013 and No.782/CAB.MIN/FINANCES/2013 on the regulation of export of merchant products (“Decree”) which raised strong opposition from the mining industry in the DRC and negatively impacted share prices of several listed mining companies active in the DRC.
The Decree banned the export of copper and cobalt concentrates while giving a 90-day moratorium to mining operators who still hold mining stockpiles of concentrates to clear their inventory. Furthermore, the Decree specified that the inventory needed to be reported to the relevant mining services in a minute duly signed from the date of the Decree publication, meaning April 12, 2013.
As pointed in our previous article on the analysis of the DRC’s ban on export of copper and cobalt concentrates (http://www.lexology.com/library/detail.aspx?g=79c68d13-9a4a-409d-9099-0b9fac3f4db7), the Decree encountered many legal and practical challenges.
From a legal standpoint, matters covered by the Decree may only be regulated by a law adopted by the DRC Parliament, not by a Ministerial Decree. Therefore, any amendment to legal provisions can only be enacted by the new law modifying the Mining Code, currently under preparation within the framework of the revision of thereof. From a practical standpoint, the implementation of the Decree exposes challenges faced by processing plants that are battling huge electric energy shortages making it difficult to transform concentrates in the DRC.
Acknowledging the energy deficit, the Minister of Mines, jointly with the Minister of Finances, enacted the Inter-Ministerial Decrees No.0327/CAB.MIN/MINES/01/2013 and No.855/CAB.MIN/FINANCES/2013 on July 4, 2013 (“new Decree”) that amends and supplements the Decree by postponing the ban on export of copper and cobalt concentrates.
More specifically, the new Decree amends paragraph 1 of article 7 of the Decree by stating that exports of copper and cobalt concentrates are prohibited, however, a moratorium of up to December 31, 2013 is granted to all mining operators who produce copper and cobalt concentrates, giving them time to comply with the ban.
Furthermore, the new Decree has added paragraph 7a stipulating that during the moratorium period, mining operators producing copper and cobalt concentrates may transform minerals either in the country or abroad. However, for transformation outside of the country, the approval from the Minister of Mines shall be obtained. A copy of the contract with the foreign processing entity shall be filed along with the approval request.
Notwithstanding with the many legal challenges encountered by the decree, since the energy deficit issue may not be resolved before end of this year, it is highly probable that at the expiry of the moratorium period, another moratorium on the ban on export of copper and cobalt concentrates be granted to mining operators.