Congo businesses denounce 'unjust' taxes in copper-mining region

KINSHASA (Reuters) - The Chamber of Commerce in Democratic Republic of Congo has complained to the government about a worsening business climate in the country’s copper-mining region, including what it says are unjustified duties on power imports.

FILE PHOTO: Excavators and drillers at work in an open pit at Tenke Fungurume, a copper and cobalt mine northwest of Lubumbashi, Democratic Republic of the Congo, January 29, 2013. REUTERS/Jonny Hogg/File Photo

In a letter to the finance minister dated June 1, the chamber said Congo’s customs agency has levied more than $300 million (£233 million) in penalties on mining companies for failing to declare electricity imports or making false customs declarations.

The chamber said this was despite the fact the public power utility, rather than the companies themselves, imported the electricity before selling it on, according to the letter.

“To force the companies to pay the unjustly demanded sums, the (customs agency) uses heavy-handed tactics, going as far as withholding the goods of the concerned companies so that they quickly give in and pay the high penalties,” the letter said.

The finance minister, who oversees the customs agency, did not immediately respond to a request for comment.

Authorities routinely say they are committed to improving Congo’s business climate, which ranks a lowly 184 out 190 countries on the World Bank’s Doing Business Index.

However, mining companies say they see little progress and are also concerned about a government proposal to revise the 2002 mining code to raise royalties and other taxes to boost the cash-strapped government’s revenues.

Mines Minister Martin Kabwelulu was scheduled to present the proposal to parliament on Friday but the session was postponed until Monday due to the lack of a quorum.

Despite such concerns, mining giants such as Glencore GLEN.L, Randgold RRS.L and China Molybdenum 603993.SS have made major investments in Congo, Africa's top copper producer and a significant producer of cobalt, gold and diamonds.

But electricity poses a knotty challenge. Congo’s copper-mining Katanga region receives only about half the power it needs from the national grid, forcing operators to rely on expensive generators or imports from neighbouring Zambia.

The state power utility recently signed a provisional agreement with South Africa’s Eskom to import 200 megawatts of power which would be used by mining companies.

Editing by David Clarke, Greg Mahlich