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 n++strategicn++.
It all began in Indonesia, which imposed 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.