The mining industry in the Democratic Republic of Congo (DRC) has existed for more than a century and constitutes a significant part of the national economy. The DRC is the leading African producer of copper and the world's leading producer of cobalt. Indeed, the country has deposits of about 50 minerals, but only the following are exploited:

• copper;
• cobalt;
• silver;
• uranium;
• lead;
• zinc;
• cadmium;
• diamond;
• gold;
• tin;
• tantalum;
• tungsten;
• manganese; and
• some rare metals, such as coltan.

However, the mining industry in the DRC faces many challenges, such as:

• transparent and responsible governance;
• respect for human rights, labour and the environment;
• capacity building;
• co-ordination between the central and provincial levels; and
• the creation of local added value.

The artisanal mining sector is highly developed in the DRC and employs hundreds of thousands of people, often in difficult, dangerous and illegal conditions. It represents about 11% of domestic cobalt production.

The legal system in the DRC is civil. This does not prevent judicial actors from resorting to case law from time to time, as it is recognised as a source of law in the DRC.

The main sources of mining legislation are:

• Law No 007 of 11 July 2002 relating to the Mining Code, as amended and supplemented by Law No 18/001 of 9 March 2018; and
• Decree No 038/2003 of 26 March 2003 relating to Mining Regulations, as amended and supplemented by Decree No 18/024 of 8 June 2018.

These provisions relate mainly to the following:

• management of the mining sector;
• the conditions to obtain a mining right;
• management and forfeiture in the event of non-compliance with legal requirements;
• environmental protection;
• corporate social responsibility; and
• the tax system.

Under Section 53 of the Land Code, the soil and subsoil belong to the State.

The Congolese Mining Code does not automatically confer mining rights to a landowner. Sections 277 to 285 govern the relations between the holders of mining rights and land occupants, which must be based on a mutual agreement between the parties consisting of the prior authorisation of the land occupant against payment of compensation by the holder of a mining right.

Under the Mining Code, the State plays the role of grantor-regulator, although it also has joint ventures with certain private operators, both international and national.

Articles 9 and 202 point 36, litera f of the Congolese Constitution of 18 February 2006, as amended by Law No 11/002 of 20 January 2011, establish the fundamentals of mining law in general. Nevertheless, the law governing the mining sector is Law No 007/2002 of 11 July 2002 on the Mining Code, as amended and supplemented by Law No 18/001 of 9 March 2018.

Mining rights are granted in the form of a right (research permit or exploitation permit). Under the Mining Code, these rights have the status of property.

The Minister of Mines is the authority empowered to grant a mining right. It should be noted that the review of the application file before the issuance of an opinion (favourable or unfavourable) is carried out by the Mining Cadastre as well as the mines directorate, which are technical branches of the Ministry of Mines. Mining rights are granted by an act (research permit and exploitation permit).

The security of occupation or possession of a mining right in the DRC is guaranteed by compliance with the legal and regulatory framework of the mining sector. According to the provisions of Articles 51 and 65 of the Mining Code, mining rights are immovable real rights that give their holder the exclusive right to search for or exploit mineral substances within the perimeter defined by the permit. These rights are granted by the competent authority, which is the Minister of Mines, after an objective, fast and transparent procedure that has five steps:

• the filing and receipt of the mining law application file;
• the investigation of the request;
• the decision to grant the requested right;
• the notification of the granting decision; and
• the establishment and issuance of the title.

Mining rights are registered in the Mining Cadastre, which is a public service that is responsible for the management of the State's mining domain and for maintaining the register of mining and career rights.

The validity of mining rights varies depending on the permit:

• a research permit is valid for five years; and
• an operating/mining permit has a renewable validity of 25 years (Articles 52 and 67 of the Mining Code).

Mining rights are also protected against any expropriation, except for reasons of public utility and subject to fair and prior compensation. Mining duties are subject to a specific tax, customs and exchange rate regime, which provides in particular for a ten-year stability clause for operating licence holders.

The right to progress from exploration to mining exploitation is subject to an authorisation system following the request of the holder of the mining right.

The holder of a mining right may waive the part covering the holder's perimeter, in whole or in part, by declaration addressed to the Minister.

Maintenance requirements and procedures for cancelling mining rights are also set by the Mining Code and the Mining Regulations, which impose obligations on holders of mining rights in terms of safety, hygiene, environment, social responsibility, subcontracting, partnership, reporting and controls. Failure to comply with these obligations may result in administrative and criminal sanctions, or even the withdrawal or cancellation of mining rights.

Mining rights may also be cancelled because of non-compliance with administrative and social obligations provided for by law and the regulation governing the mining sector. The cancellation begins with the decision to forfeit the mining right by the Mining Cadastre after finding the breach. The right holder has 30 days to appeal, failing which the mining rights will be withdrawn by the Minister of Mines, the decision to withdraw will be notified and the Mining Cadastre will cancel the registration of the title.

Articles 289 and 290 of the Mining Code

Control of the operation, marketing and transferability of mining products is ensured by various state services and bodies, such as:

• the Mining Environmental Protection Directorate;
• the Congolese Environment Agency;
• the National Promotion and Social Service Fund;
• the Small Scale Mining Assistance and Supervision Service;
• the Evaluation, Expertise and Certification Centre;
• the Mining Division;
• the Customs and Excise Division; and
• the Central Bank of Congo.

These services and bodies are responsible for ensuring compliance with technical, economic, social and environmental standards in the mining sector, and for ensuring the payment of duties and taxes due to the Public Treasury. They have powers to control, verify, sanction and regulate mining activities.

The marketing of mining products that come from the operating perimeter is free. The holder of an operating licence can sell their products to customers of their choice at freely negotiated prices (Article 85 of the Mining Code).

Mining rights are transferable and mortgageable, subject to the prior approval of the Minister of Mines and the payment of the corresponding fixed duties. Research permits cannot be subject to mortgage.

The main environmental laws and regulations in force in the Congolese mining sector are:

• Law No 007 of 11 July 2002 relating to the Mining Code, as amended and supplemented by Law No 18/001 of 9 March 2018; and
• Decree No 038/2003 of 26 March 2003 relating to Mining Regulations, as amended and supplemented by Decree No 18/024 of 8 June 2018.

These provisions relate to:

• environmental protection;
• the social responsibility of extractive companies;
• waste management;
• the rehabilitation of mining sites;
• the environmental and social impact study on each project;
• environmental and social management plan specifications;
• surface tax; and
• the mining fund for future generations, etc.

Prior to any mining operation, the environmental authorisation process includes the following steps:

• the request for environmental authorisation is sent to the Minister of the Environment and Sustainable Development by the applicant for the mining title or the research or quarrying permit, accompanied by an environmental and social impact study (EIES) and an environmental and social management plan (PGES);
• the Congolese Environment Agency (ACE) examines the admissibility of the request and carries out the technical evaluation of the EIES and the PGES, taking into account comments from the public, local authorities and stakeholders;
• the ACE issues an opinion on the compliance of the EIES and the PGES with environmental and social standards, and proposes corrective or compensatory measures if necessary; and
• the Minister of the Environment and Sustainable Development issues the environmental authorisation if the ACE's opinion is favourable, or refuses it if the opinion is unfavourable or if the applicant does not comply with the required corrective or compensatory measures.

The environmental authorisation is valid for the duration of the mining title or the research or quarrying permit, and may be suspended or withdrawn in the event of non-compliance with the environmental and social conditions set by the authorisation or by the current regulations. It is issued at the national level by the Minister of the Environment and Sustainable Development, on the advice of the ACE, which is a public establishment of an administrative and technical nature placed under the supervision of the Ministry of the Environment and Sustainable Development. However, provinces and decentralised territorial entities may participate in the environmental authorisation process by making observations or recommendations during the public consultation, or by ensuring monitoring and control of the implementation of environmental and social measures on the ground.

Environmental authorities tasked with defining, co-ordinating, implementing and controlling a national policy on the environment and sustainable development, and with promoting the rational management of natural resources, the conservation of biodiversity, the fight against climate change, the prevention and reduction of pollution and nuisances, environmental education and awareness, and the participation and consultation of stakeholders, are facing numerous challenges and constraints, such as:

• lack of financial, human, material and technical resources;
• the multiplicity of actors and stakeholders;
• demographic and economic pressure;
• poverty precariousness;
• conflicts and insecurity; and
• corruption and impunity.

These factors limit the capacity of environmental authorities to ensure effective and sustainable protection of the environment in the DRC.

The DRC has many environmentally protected areas that aim to preserve biodiversity, ecosystems, natural resources and ecosystem services. They are governed by Law No 14-003 of 11 February 2014 relating to nature conservation, and affect exploration and mining in several ways.

On the one hand, access to mineral resources located in these areas is limited, because mining activity is prohibited in national parks and nature reserves unless an exceptional exemption is granted by the President of the Republic. In hunting areas and community heritage areas, mining activities are subject to prior authorisation from the Minister of the Environment and Sustainable Development, following the approval of the ACE.

On the other hand, they impose environmental and social obligations on mining operators, such as:

• carrying out an environmental and social impact study (EIES);
• developing an environmental and social management plan (PGES);
• complying with specifications;
• paying a surface tax;
• making a contribution to the mining fund for future generations;
• rehabilitating mining sites; and
• compensating for and repairing damage to the environment and communities.

These obligations aim to prevent, reduce and control the negative impacts of mining activities on the environment and populations, and to promote sustainable development.

The issue of community relations in a mining project under Congolese mining law is addressed through several mechanisms, including the following.

• The specifications (cahier des charges) define the social responsibility of a mining company towards local communities affected by the mining project and detail the company's obligations in terms of social and environmental responsibility. After obtaining the permit, the owner of a mining right must provide the cahier des charges at least six months before the start of exploitation. Pursuant to Article 258 of the Mining Code, the mining company also offers an allocation of 0.3% of its turnover for the financial year during which it is established for the purpose of contributing to community development projects.

• Dialogue and consultation are fundamental principles of the revised Mining Code, which provide that mining companies must consult and inform local communities throughout the mining project cycle, taking into account their opinions and concerns, their expectations and suggestions. The majority of projects relate to the construction of schools, health infrastructure, etc.

Enforcement/compliance in the mining sector remains weak, meaning that investors who are directly responsible for the environmental and social situation of exploited areas need to increase their awareness of such issues.

Consultation with the local community is mandatory and is carried out by the investor.

There are specially protected communities in the DRC, such as indigenous peoples. The DRC is the first African country to have adopted a specific law on the rights of indigenous peoples: Law No 11/022 of 24 December 2010 on the promotion and protection of the rights of indigenous populations, which recognises the existence and identity of indigenous peoples, as well as their rights to non-discrimination, participation, consultation, education, health, culture, land, natural resources, development, etc.

However, the law on the rights of indigenous peoples is not yet fully implemented or popularised, and indigenous peoples still face many challenges and violations of their rights, particularly with regard to access and control of land, territories and resources. Thus, indigenous peoples are often dispossessed of their lands for the benefit of mining, forestry, agricultural, conservation or development activities, without prior consultation or free, prior and informed consent, and without compensation or reparation if they are affected by the mining.

Therefore, it is necessary for investors to take these realities into account and act in accordance with the law. It is also necessary to strengthen dialogue and consultation between indigenous peoples, the State, mining companies, civil society organisations, local authorities and other stakeholders in order to prevent and resolve conflicts and promote the sustainable and inclusive development of indigenous peoples and their territories.

It is a legal requirement to have a community development agreement.

ESG guidelines or regulations in Congolese mining law aim to ensure that mining activities respect the principles of sustainable development, environmental protection, human rights, social responsibility and good governance.

Good Example

A good example of environmental and community relations/consultations around mining projects in the DRC is the biodiversity conservation and sustainable development project in the Luki landscape, in the Kongo Central province, financed by the GEF Small Grants Program and implemented by the NGO Action pour le Développement Communitaire (ADC). This project aims to strengthen the capacities of local communities to sustainably manage natural resources, restore ecosystems degraded by mining activities, diversify sources of income and improve the living conditions of populations. The project involved local communities in all stages, from design to evaluation, implementation and monitoring. It also promoted dialogue and consultation between different stakeholders, including local authorities, mining companies, civil society organisations and research institutions.

The project made it possible to:

• restore more than 100 hectares of forest;
• create community nurseries;
• train more than 200 people in agroforestry techniques;
• raise awareness among more than 5,000 people about biodiversity conservation;
• create women's associations; and
• strengthen local environmental governance.

Bad Example

A bad example is the Kibali gold mine project, in the Haut-Uélé province, operated by the Barrick Gold company. This project has been accused of violating the rights of local communities, particularly in terms of consultation, compensation, resettlement, profit sharing, respect for environmental and social standards and conflict resolution.

According to a report by the NGO RAID, the project resulted in the forced displacement of more than 20,000 people, without prior consultation or free, prior and informed consent, and without adequate compensation or reparation.

The project also caused negative impacts on the environment, such as water pollution, destruction of biodiversity, soil erosion, etc, and has generated social conflicts, such as violence, insecurity and corruption. It has been criticised for its lack of transparency, accountability and participation of local communities in project benefits and governance.

A few years ago, the State, entities campaigning for environmental conservation as well as the mining industries implemented several strategies to combat climate change and encourage the Congolese mining industry to contribute to the global energy transition, by providing minerals and metals essential to the manufacturing of green energy (technologies).

In order to reduce greenhouse gas emissions and improve energy efficiency, some companies produce and aim to increase the production of hydroelectric energy and strengthen their electricity distribution network in the DRC. A similar project to help reduce the mining sector's dependence on fossil fuels and lower energy costs has gained the support of the World Bank.

As it is home to more than 50% of the world's reserves of cobalt (a key element for lithium-ion batteries), the DRC is doing everything possible to exploit this resource in a responsible and sustainable manner. However, it is up to the Congolese mining industry to respect the highest environmental and social standards, taking into account the potential impacts of climate change on the environment and populations.

These initiatives aimed at combating climate change also offer financing and investment opportunities for the Congolese mining industry, by promoting innovation, competitiveness and green growth, accelerating the response to climate change and mobilising resources to contribute to the development of the country.

There is a legal project in the DRC that aims to strengthen the environmental and social requirements applicable to mining activities, and to promote the transition to a low-carbon and circular economy. The project introduces the notion of the “responsible mine” – ie, a mine that respects the principles of sustainable development, environmental protection, human rights, social responsibility and good governance, and that contributes to the fight against climate change and to promote the energy transition:

• it requires holders of mining rights and quarry operators to carry out a life cycle analysis (LCA) of their products, in order to assess the environmental and social impacts of their activities, from the extraction phase to the end-of-life phase, through the transformation, transport and use phases;
• it reinforces the obligations of mining rights holders and quarry operators in terms of the study of environmental and social impact (ESIA) and environmental and social management plan (ESMP), taking into account the effects of climate change on the environment and populations, and the necessary adaptation and mitigation measures; and
• it creates a fund for the ecological transition of the mining sector, funded by a contribution of 1% of the turnover of mining companies, intended to finance projects to reduce greenhouse gas (GHG) emissions, improve energy efficiency and promote renewable energies, waste recovery, ecosystem restoration and support for local communities.

The “responsible mining” label rewards mining companies that respect the ESG performance criteria defined by the decree, which will be granted tax, customs and administrative advantages.

The DRC, together with the United Nations and its other stakeholders, is working to achieve the Sustainable Development Goals, grouped into 17 global, interconnected and ambitious goals to address the development challenges facing populations. In the DRC, good governance, the consolidation of the rule of law, the protection of civilians and the promotion of sustainable and inclusive development are at the heart of interventions to support economic growth and the sustainable and environmentally conscious management of natural resources, for the benefit of populations.

There are government or legislative initiatives linked to the growing demand for so-called energy transition minerals, such as lithium and nickel, in the DRC.

• The Electricity Sector Development Project (PDSE), financed by the World Bank, aims to increase hydroelectric power production and strengthen the electricity distribution network in the DRC. This project helps to lower energy costs and reduce the mining sector's dependence on fossil fuels; it also promotes the exploitation of energy transition minerals, such as lithium and nickel, which require high electricity consumption for their transformation.

• The draft law on strategic mines, currently being developed, aims to define the criteria and modalities for classifying strategic minerals – ie, those whose exploitation is of particular interest for national security, economic and social development, or the energy transition. This law could concern energy transition minerals, such as lithium and nickel, which are increasingly in demand on the global market, and which represent significant potential for the DRC, which has large and varied deposits.

The holder of a mining right is subject to the tax, duties and para fiscal regime for all activities carried out on the national territory, for the benefit of the central government, the provinces and decentralised territorial entities.

Mining royalties are calculated and payable at the time the merchantable product leaves the extraction site or processing facility for shipment.

The law makes no difference between the taxation of Congolese or foreign companies.

The Prime Minister may, by decree deliberated in the Council of Ministers, grant a certain number of incentive measures to provinces suffering from an infrastructure deficit to boost their economic growth using mining resources. Such measures include:

• exemptions or reductions of taxes, duties and fees, as well as tax stabilisation agreements, which guarantee the maintenance of the tax advantages acquired for a period of ten years, in the event of a modification of tax legislation;
• government or legislative initiatives linked to the growing demand for energy transition minerals, such as lithium and nickel, which aim to strengthen the production of hydroelectric energy, reform the Mining Code to integrate environmental and social requirements, create a fund for the ecological transition of the mining sector, and establish a “responsible mining” label; and
• financing and investment opportunities offered by international initiatives to combat climate change, which promote innovation, competitiveness and green growth in the mining sector, and which mobilise resources to support developing countries, notably the DRC, in the implementation of their nationally determined contributions (NDCs) under the Paris Climate Agreement.

The tax system imposes a tax on transfers or capital gains when transferring or selling a mining project in the DRC. This tax also applies when the transfer takes place via corporate structures outside Congolese territory.

• The tax on transfers or capital gains is calculated according to the personal income tax (IRPP) or the profits and profits tax (IBP) regime, depending on the status of the transferor. The tax rate is 30% for individuals and 35% for legal entities.

• The tax on transfers or capital gains applies to transfers of mining rights, whether direct or indirect. The 2018 Mining Code provides that any indirect transfer of mining rights must be declared to the Mining Cadastre and submitted for approval to the Minister of Mines, under penalty of nullity.

• The tax on transfers or capital gains also applies when the transfer takes place via corporate structures outside Congolese territory, if the transfer concerns a mining right located in the DRC. The 2018 Mining Code provides that mining companies must declare any restructuring or modification of their share capital to the Mining Cadastre and the Tax Service, whether carried out in the DRC or abroad, if it results in a change of control or significant influence over the company holding the mining right.

The improvement of the business climate is the main characteristic for attracting investment in the mining sector. The speed of processing applications for mining rights and tax reductions are also assets for the DRC to attract investors in mining.

By exploiting resources in the Congolese territory directly, an investor ensures it will have products with a well-known origin.

There are no special rules on the approval of foreign investments in the DRC. However, there are some mining-related restrictions in terms of shareholding: the law provides that at least 10% of the share capital must be held either by a natural person(s) of Congolese nationality or by a legal entity under Congolese law constituted solely by Congolese people.

Artisanal exploitation is exclusively reserved for Congolese nationals.

Investments are also subject to obligations to repatriate currencies relating to the sale of minerals outside the national territory and to pay taxes as well as royalties.

The DRC is party to several multilateral or bilateral treaties that promote and protect investments in exploration and mining.

• The DRC signed the “Energy Charter Treaty” in 1994, which aims to promote co-operation in the field of energy, particularly in terms of energy security, transit, energy efficiency, environmental protection and dispute resolution. This treaty covers investments in the mining sector, which is considered an energy-related economic activity.
• The DRC signed the “Treaty of the Organization for the Harmonization of Business Law in Africa” (OHADA) in 2012, aimed at harmonising business law in member countries, particularly in matters of company law, contract law, security law, arbitration law and collective procedure law. This treaty offers a uniform and secure legal framework to foreign investors who wish to establish themselves in the OHADA common market, which brings together 17 African countries.
• The DRC has also concluded bilateral investment promotion and protection agreements (API) with several countries, including Belgium, China, Germany, France, Italy, the United Kingdom, Switzerland and the United States.

These agreements aim to encourage and protect reciprocal investments between the contracting parties, granting them guarantees such as most favoured nation treatment, protection against expropriation, free transfer of capital and access to international arbitration in the event of a dispute.

Added to this is the Kimberley Process Certification System (KPCS) and the Extractive Industries Transparency Initiative (ITIE).

The main sources of financing for research, development and mining in the DRC are:

• national or foreign private investors, including investment funds, banks, trading companies, etc, that grant or negotiate loans guaranteed either by the equity of the borrowing companies or by mining rights;
• international financial institutions such as the World Bank, the African Development Bank, the European Investment Bank, etc, which offer concessional financing, donations, equity investments, guarantees and advice on mining projects, with a view to supporting economic and social development, environmental protection, good governance, etc; and
• international and regional organisations, such as the European Union, the African Union and the Economic Community of Central African States, which provide financial, technical and political assistance to mining projects within the framework of their co-operation programmes and regional integration.

The government may also contribute to the financing of mining projects, either directly or indirectly, through its participation in mining companies, their subsidies, tax exemptions, etc.

National and international securities markets play an essential role in financing mining activities in the DRC, by facilitating access to capital, stimulating growth, promoting competitiveness, and strengthening investor confidence. They enable mining companies to raise funds from investors, diversify their sources of financing, reduce their financing costs, and increase their visibility and credibility in the market.

In addition to the regional financial market, there are international financial markets, which are accessible to mining companies in the DRC, under certain conditions. These financial markets are located in major financial centres around the world, such as New York, London, Paris, Frankfurt, Hong Kong, etc. They offer mining companies in the DRC the opportunity to obtain financing from a wide range of investors, to benefit from a better valuation of their assets, and to comply with international standards of governance and social and environmental responsibility.

However, these financial markets also require DRC mining companies to meet eligibility, performance, transparency and compliance criteria that may be stricter and more costly than those of the regional financial market.

Securities aim to guarantee the repayment of funds lent or invested in the event of default by the debtor or the investee. They can be real or personal. Real security interests relate to the property of the debtor or the investee, which is allocated to the payment of the debt or the return on the investment, while personal securities are commitments made by a person, called the guarantor, to pay the debt or the return on the investment in place of the debtor or the investee in the event of default by the latter.

Real security rights over mining concessions and related assets may be mortgages or pledges. Mortgages relate to immovable property, such as land, buildings or fixed installations, while pledges relate to intangible movable property such as mining titles, shares, debts or intellectual property rights, or to tangible movable property such as machinery, vehicles or inventory.

Personal security interests in mining concessions and related assets may be bonds, standalone guarantees or letters of credit.

Security rights over mining concessions and related assets are subject to conditions of validity, publication and enforcement. The conditions for validity are the consent of the parties, the capacity of the parties, the lawfulness of the object and cause, and the determination of the debt or return on investment. Publication consists of making the creation of security interests enforceable against third parties, through registration in the movable security register or at the mortgage office, or by delivery of the property to the creditor or investor. Realisation consists of implementing the security in the event of default by the debtor or the investor, through the sale of the property, the allocation of the property or the execution of payment.

The security interests mentioned above are governed by common security law (OHADA), the Congolese Civil Code, the Congolese Commercial Code, the Congolese Code of Civil Procedure and the Congolese Code of Judicial Organization and Jurisdiction. However, there are special provisions applicable to security interests over mining concessions and related assets, as provided for by the Mining Code and the Mining Regulations. These special provisions concern the following in particular:

• the obligation to obtain prior authorisation from the Minister of Mines to constitute security rights over mining titles;
• the prohibition of creating security rights over research permits;
• the possibility of creating security interests over products mining;
• the priority of tax and social claims over security; and
• the regime of conflicts of law and jurisdiction.

The mining sector in the DRC faces several challenges, including transparency in ESG responsibility as well as security. The country has been subject to validation of the ITIE (Extractive Industries Transparency Initiative) process since 1 January 2022, in order to verify compliance with international standards in the management of natural resources.

The suspension of mining permits has been ordered since December 2021, to clean up the sector and fight against corruption and illicit mineral trafficking.

Based on this progress and mainly following the recommendations from the general State of Mines organised in July 2021, the Congolese mining sector could experience significant legislative changes, including the revision of the 2018 Mining Code, the reform of public mining companies, the diversification of mining production, the promotion of the artisanal sector and the involvement of local communities in the development of the sector.