A Glencore-owned copper mine in Congo is in a conflict with local tax authorities over claims of €800 million in unpaid royalties, leading to frozen bank accounts and a brief warehouse seal-off. Despite this dispute, copper and cobalt production has continued uninterrupted, and KCC has paid $2.3 billion in taxes and royalties from 2021 to 2023.
Glencore Plc’s copper mine, Kamoto Copper Company (KCC), located in the Democratic Republic of Congo, is currently engaged in a significant dispute regarding royalty payments with the local tax authority known as DGRAD. The latter claims that KCC owes over €800 million (approximately $894 million) to the Congolese state. The situation escalated earlier this year when KCC’s local bank accounts were frozen, and more recently, tax agents temporarily sealed off one of the company’s warehouses that stores metal materials, although operations resumed shortly thereafter. Despite the ongoing row, both copper and cobalt production at the KCC has remained stable, with the mine exporting 200,000 tons of copper and 16,000 tons of cobalt in 2023. The majority stakeholder of KCC is Glencore, which holds a 75% interest. Between 2021 and 2023, KCC has reportedly made tax and royalty payments totaling $2.3 billion to the Congolese government. A representative from Glencore has chosen not to provide comments on the matter, while the finance ministry has not responded to inquiries regarding the conflict.
The Democratic Republic of Congo has emerged as a substantial player in the global copper and cobalt market, with its copper exports more than tripling since 2015 and the country recently surpassing Peru to become the world’s second-largest copper producer. The mining sector is crucial for the Congolese economy, particularly as it is responsible for about three-quarters of the global cobalt supply, which is essential for the production of electric vehicle batteries and other green technologies. Disputes over royalties and taxes are not uncommon in the mining industry, particularly in developing nations where regulation and governance can be contentious. In this context, the conflict between Glencore and DGRAD raises important questions regarding fiscal responsibility and the sustainable management of natural resources.
The ongoing royalty dispute between Glencore’s Kamoto Copper Company and the Congolese tax authorities highlights significant tensions in the mining sector within the DRC. While production remains unaffected at present, the financial ramifications and potential regulatory changes could have long-term implications for both Glencore and the Congolese economy, given the importance of copper and cobalt in global markets today. As stakeholders await resolution, this situation may serve as a critical case study on the dynamics of mining operations within emerging economies.
Original Source: financialpost.com
