A move by the Democratic Republic of Congo to sharply raise taxes on mining projects has hit shares of billionaire Robert Friedland’s Ivanhoe Mines, which is developing a giant copper mine in the resource-rich country.
Ivanhoe Mines, ended down 11.3% on the Toronto Stock Exchange, not far off its lows for the day.
The Vancouver-based company, worth C$2. 8 billion after the day’s losses, is in partnership with China’s Zijin Mining on the Kamoa-Kakula copper deposit in the Central African nation.
Kamoa-Kakula is considered the largest high-grade copper project in development globally with a copper resource of more than 30m tonnes.
Ivanhoe is also building a new operation at Kipushi, a past producing zinc-copper mine in partnership with Congo’s state-owned Gécamines. Ivanhoe’s most advanced project Platreef platinum is located in South Africa.
Firms operating inside the country which includes Glencore, Randgold Resources, China Molybdenum, Eurasian Resources Group, MMG and others will immediately be subjected to higher royalties on metals including copper, cobalt and gold, as well as a new 50% tax on so-called super profits.
Super profits are being defined as income realized when commodity prices rise 25% above levels included in a project’s bankable-feasibility study. Given the improvement in the price of most metals over the past couple of years – copper is up 67% since January 2016 and zinc +130% – having to deal with the new levy is more than just a possibility