The United States Securities and Exchange Commission (SEC) voted last summer in favor (3-2) of a final conflict minerals regulation. This affects companies who report to the SEC and who source raw materials from areas of the Democratic Republic of Congo (DRC) as well as certain areas in neighboring countries. As quality and data are sometimes easier to trace and manage if you own the supply, some companies are looking towards buying mining rights in the region. This is usually done on a geographical basis; but it can also be done in regards to a specific deposit.
Purchasing mining rights in the Congo
Administrative procedure. Any private party can engage in non-artisanal research or exploitation of mineral substances in the DRC provided he or she is the holder of a valid mining right (research or exploitation), which is obtained upon completion of the corresponding administrative procedure.
First come, first served. The granting of mining titles is based on a first-come, first-served basis.
By area, except when… 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.
Begin within 6 months. To maintain the validity of its mining rights, the holder must commence exploration within six months (research permit) or commence development and construction works within three years (exploitation permit) as of the date the title evidencing its right is issued, and pay the surface duty per square relating to its 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 its right.
Foreign vs. domestic. There are no stated 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, who can only be individual DRC nationals
- 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 its intermediary.
We hope this helps give a general perspective on how possible it is or isn’t for your business to purchase DRC mining rights if needed. For some, software for supply chain traceability will do the compliance and quality trick. But others may want to go deeper into ownership of their supply chain. For more information on purchasing mining rights, may we refer you to this excellent document on the subject:
http://www.mcguirewoods.com/news-resources/publications/international/mining-drcongo.pdf