The legal system of the DRC is civil law-based and the mining industry is regulated through national legislation, regulations issued by the DRC parliament and the DRC executive branch.

 

The main legislation that the mining industry comes under the control of is the Mining Code (adopted in 2002) and the ancillary Mining Regulation, adopted in 2003. This legislature is in general application throughout the entire country.

 

The Mining Code was enacted by Law No. 007/2002 on the 11th of July 2002 (the Mining Code). The implementing measures of the Mining Code are provided by the Mining Regulation, enacted by Decree No. 038/2003 on the 26th of March 2003 (the Mining Regulation). This core legislation includes environmental standards applicable to mining activities (also including quarry rights).

 

The main administrative entities in charge of regulating mining activities in the DRC as provided by the Mining Code are:

 

 

 

 

 

According to the Constitution and the Mining Code, the state is the owner of all mineral resources in the soil or subsoil. The state may grant to private parties (local or foreign) the rights to explore and exploit mineral resources by awarding mining titles. The mining legislation also, does not impose a specific classification system for reporting mineral resources and reserves.

 

The mining rights are protected by the DRC judicial system which adheres to the rule of law enforced pursuant to established procedures by courts that are independent from the executive and legislative branches of the state. Moreover, the Mining Code provides for a specific recourse system for mining right holders and organizes three ways to resolve mining disputes or threats over mining rights. Such disputes can be resolved by administrative recourse, judicial recourse and national or international arbitral recourse, depending on the nature of such threat or dispute.

 

 

Exploration operations are subject to the prior approval of a mitigation and rehabilitation plan (MRP) subsequent to the delivery of the exploration permit. However, prospecting and small-scale exploitation permits are only subject to codes of conduct. An exploration permit may be obtained in a maximum of 47 calendar days from the date of filing the request, whist the approval of the MRP may be obtained in a maximum of 24 calendar days from its filing.

 

Exploitation permits are subject to the prior approval of an environmental impact study (EIS) and an environmental management plan (EMP). Exploitation permits may be obtained in a maximum of 252 calendar days.

 

As part of its environmental management plan, the holder of an exploration or exploitation right must provide for the measures of remediation and environmental rehabilitation after closure, the costs of which need to be entirely backed by a financial guarantee. However, the funding of the guarantee depends on the type of operation and its duration, and can take place over time. The amount is revised mid-term.

 

The rights of aboriginal, indigenous, lawful occupants and currently or previously disadvantaged peoples are protected by the mining rights.  

Any private party can engage in non-artisanal exploration or exploitation of mineral substances in the DRC provided he or she is the holder of a valid mining right (exploration or exploitation), which is obtained upon completion of the corresponding administrative procedure. The granting of mining titles is based on a ‘first-come, first-served’ principle: the applications for mining rights for a given ‘perimeter’ (demarcated surface area with indefinite depth) composed of quadrangles or ‘squares’ are registered in the chronological order of their filing.

 

In exceptional cases, the minister of mines may submit to tender, open or by invitation, mining rights relating to a specific deposit. To maintain the validity of his or her mining rights, the holder must commence exploration within six months (exploration permit) or commence development and construction works within three years (exploitation permit) as of the date the title evidencing his or her right is issued, and pay the surface duty per square relating to his or her title at the counter of the Mining Registry. If he or she fails to fulfill any of these obligations, the holder may be deprived of his or her right. A title-holder must also comply with specific rules relating to, among others, protection of the environment, cultural heritage, health and safety or construction and planning of infrastructure.

 

There are no distinctions between mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties, except for artisanal diggers and traders (small-scale mining), who can only be individual DRC nationals, and except for foreign companies that are requested to incorporate a local company before they apply for an exploitation permit. Foreign parties must elect domicile with an authorized domestic mining and quarry agent and act through his or her intermediary. A foreign party need not have a domestic partner, but a company wishing to obtain an exploitation permit must transfer 5 % (non-dilatable) of its share capital to the state.

 

The surface rights are acquired by private parties according to the Land Law No. 73-021 of the 20th of July 1973, the state has the exclusive, inalienable and imprescriptible property of the land. The state can grant surface rights to private or public parties that have to be distinguished from mining rights since surface rights do not entail the right to exploit the mineral substances of the soil or subsoil and, inversely, a mining right does not entail any surface occupation right over the surface.

 

However, subject to any rights of third parties over the surface concerned, the holder of an exploitation mining right has, with the authorization of the governor of the province concerned, and on the advice of the administration of mines, the right to occupy within his or her mining perimeter the land necessary for his or her activities and associated industrial activities, including the construction of industrial plants and dwellings, to use the water, dig canals and channels, and establish means of communication and transport of any type.

 

Nevertheless, any occupation of land preventing the rightful surface right holders from using the surface, or any modification rendering the land unfit for cultivation, will entail the obligation for the holder of the mining rights to pay fair compensation. The mining rights holder is also liable for the damage caused to the occupants of the land in connection with his or her mining activities, even if they are authorized. The Mining Code provides for judicial and arbitral recourses in the event of disputes.

 

 

There are generally several duties, royalties and taxes that are payable by private parties on the concessions; firstly, the tax and customs regime that applies to mining activities is exhaustive: the Mining Code provides for all the taxes, charges, royalties and other fees owed to the Treasury by a mining title holder in respect of his or her mining activities, to the exclusion of any other form of taxation.

 

This principle does not, however, prevent the tax agencies from often claiming additional taxes. When applicable, the tax provisions of the Mining Code refer to the general tax legislation. Second, the Mining Code provides a certain guarantee of stability: the existing tax, customs, exchange and other benefits applicable to mining activities remain in effect for 10 years in favor of each concerned mining title holder in the event that the Mining Code is amended.

 

A mining royalty is owed as from the date of commencement of effective exploitation. The mining royalty is calculated on the value of sales made, less transport costs and fewer assays, insurance and marketing costs. The rate of the mining royalty is 0.5% for iron or ferrous metals, 2% for non-ferrous metals and 2.5% for precious metals.

 

A professional tax on benefits at the preferential Mining Code rate of 30% (instead of the 40% corporate tax rate) is levied on the net profits from exploitation determined in accordance with the accounting and tax legislation in force.

 

An exploration permit holder is liable for the tax on the surface area of mining concessions at the rates of US$0.02 per hectare for the first year, US$0.03 for the second year, US$0.035 for the third year and US$0.04 for each subsequent year. An exploitation permit holder is liable for this tax at US$0.04 per hectare for the first year, US$0.06 for the second year, US$0.07 for the third year and US$0.08 for subsequent years.

 

A special surface duty, payable annually to the Mining Registry, is levied on the number of squares held by a title-holder. The duty is meant to cover service and management costs of the Mining Registry and the Ministry of Mines. For an exploration permit, the annual duty per square amounts to US$2.55 for each of the first two years, US$26.34 for each subsequent year, US$43.33 for each year of the first renewal period and US$124.03 for each year of the second renewal period. For an exploitation permit, the annual duty per square is US$424.78 for an ordinary exploitation permit, US$679.64 for a tailings exploitation permit and US$195.40 for a small-scale exploitation permit.

 

It is important to note that there are some tax advantages and incentives available to private parties that perform mining activities, which entail some reductions or exemptions from taxes and customs duties, these include a 10% reduction on professional tax benefits; reductions on export customs duties; withholding tax on interest and dividends: zero instead of 20% on interest paid on loans contracted abroad in foreign currency; 10 instead of 20% on dividends and other distributions; and special facilities are granted for deductions for exploration and development, provisions for depletion allowances, depreciations, etc. it is also noteworthy to say that there are no distinctions based on nationality of the exploring or exploiting parties

 

The principal business structures used by private parties to execute mining activities are the two following types of locally incorporated companies:

 

 

There are some restrictions and limitations imposed on mining companies with regards to the use of domestic and foreign employees, with the mining operators being able to employ a maximum of 5% of foreign employees for management staff and a maximum of 10% for other positions. Certain jobs are reserved for DRC nationals, but derogations may be granted. Foreign employees are required to obtain a work permit, generally valid for two years and renewable.

 

The Mining Code and the Mining Regulation provide for mainly self-contained environmental measures (however, see also Law No. 011-2002 of 29 August 2002 on the Forestry Code), and health and safety rules. The principal regulatory bodies that administer those laws are the department in charge of the protection of the mining environment (for environmental matters) and the directorate of mines (for health and safety matters).