Worlds No.2 miner Rio Tinto said Tuesday that cost inflation driven by rising oil prices and a resurgence of resource nationalism are increasingly affecting mining companies investment decisions. Major miners operating in the Democratic Republic of Congo, Africas top copper producer and source of over 60% of the global cobalt supply, are vigorously fighting a new mining code. The fresh legislation strips away a stability clause protecting existing investments from changes to the fiscal and customs regime for 10 years, introduces a 50% windfall profits tax and gives powers to the mines minister to hike royalties on minerals considered strategic.
Indonesia started this by imposing new rules on the exports of unprocessed ore early last year. Tanzania followed suit imposing two months later a ban on exports of gold concentrates. Something similar happened in South Africa, which last year unveiled a revised mining code that would have imposed a 1% tax on mining companies revenues – as opposed to their profits, as is common.