This EITI Report covers Democratic Republic of Congo's extractive sector in 2016. It was published in December 2018.
At the height of the commodity boom in 2007, when the DRC began implementing the EITI, decades of conflict, political instability, corruption, looting and mineral smuggling had decimated the mining sector, which used to be DRC’s engine of growth, and left the government with large liabilities for its state-owned enterprises (SOEs) that had become practically insolvent. Despite the country’s vast natural resources, 63% of the 75 million Congolese citizens were living below the poverty line of less than one dollar per day in 2012, according to the World Bank.
In this context, the government of the DRC committed to implement the EITI to attract foreign direct investment to revive the mining sector and ensure that revenues are well managed for the benefit of all citizens. Apart from a slight decrease in 2009 due to low commodity prices, EITI Reports have covered nine financial years (2007-2016) and shown a steady increase in government revenues, except for a small decrease in revenues in 2016. Revenues collected in the mining sector surpassed that of the oil and gas sector in 2010, when 63% of the USD 875 million came from mining companies. In 2015, the extractive sector generated USD 1,7 billion, 82% of which came from the mining sector. In 2016, the sector generated USD 1,13 billion, 90% of which came from the mining sector. The extractive sector accounted for 98,04% of exports from the DRC in 2016.
Beyond reporting companies payments, the EITI DRC has adopted innovative approaches to beneficial ownership, expanding EITI reporting to the artisanal and small-scale mining and forestry sectors, and automating online reporting by companies and government entities. EITI reporting has also allowed to shed light on key thematic issues, such as the infrastructure provisions put in place by the SICOMINES project. In 2018, DRC EITI published a standalone report on state-owned entreprises based on a review of the nine SOEs' financial statements, providing information on revenues collected by these entities.
DRC EITI and stakeholders engaged in the process were instrumental in including provisions related to transparency in the revised Mining Code, published in March 2018. Routine disclosures through government systems are improving, especially in the mining sector. The Ministry of Mines website provides links to over 140 contracts, as well as detailed production and export data for 2011-2018. The Ministry of Finance publishes monthly revenues collected by the government from the exploitation of natural resources.
The 2015 EITI Report showed that more than half of the privately held mining companies disclosed their beneficial owners. Information was not disclosed for three companies operating in the oil and gas sector, including PERENCO, the country’s largest tax payer of that sector. The disclosures often include details about the identity of the owners, such as the date of birth or residential address. Previous reports have revealed beneficial owners that were both politically exposed persons and owners whose birth date is more recent than the year covered by the EITI Report. 2016 data is available on the DRC EITI online data portal.
The evaluation report from DRC's participation in the 2015 beneficial ownership pilot notes that the major challenge in obtaining beneficial ownership disclosures was the lack of legal requirements for extractive companies to report their beneficial owners. According to the report, “the absence of a law on the beneficial ownership contributed to suspicion amongst the companies, who questioned the concept of beneficial ownership and the relevance of beneficial ownership disclosures. Despite the tremendous efforts undertaken by the MSG and the secretariat to improve the perception of the concept of beneficial ownership, some companies preferring to limit their disclosures to the legal owners, which, according to them, is what they are required to disclose in accordance with Congolese law and company Statutes".
The 2018 Mining Code and its implementing decree introduced provisions related to the disclosure of beneficial owners by mining companies. Local EITI stakeholders worked together to propose a draft decree to further strengthen the legal basis provided by these revisions, including setting the framework for disclosures in the mining, oil and gas, and forestry sectors.
New investments in the mining sector led to a significant increase in production from 2010 to 2014, while oil production remained relatively stable. Based on EITI reporting, cobalt, coltan and gold production increased significantly from 2014 to 2015. However, the mining sector in general experienced a slowdown of production and exportation in 2015. In 2016, production of key minerals such as cobalt, copper, diamond and gold diminished.
Industrial production is concentrated mainly in the Katanga, South-Kivu, Maniema and Oriental Provinces. The former Katanga province hosts some of the world's largest copper and cobalt mines, including Kamoto Copper Company (KCC) and Tenke Fungurume Mining (TFM). Gold production is both industrial and artisanal, the Kibali Gold mine being one of the largest projects. Diamond, coltan and casserite are primarily artisanally-mined, especially in the Eastern regions of the territory, with ASM accounting for approximately 89% of national diamond production.
As documented in the 2015 and 2016 EITI Reports, DRC EITI took steps to try and clarify methods for calculating the value of mineral production, given significant discrepancies between company and government disclosures. Representatives from some of the largest mining companies worked together to agree on a method for disclosing production values, which was mirrored in the implementing decree of the 2018 Mining Code.
Meanwhile, oil production remains marginal given the important reserves available, reaching approximately 8,3 million barrels in 2015 and 7,2 million barrels in 2016.
DRC is the world's largest producer of cobalt, which is used in the production of batteries for cell phones and other consumer electronics. The country holds more than half of the world’s cobalt reserves according to the US Geological Survey. In addition to cobalt, DRC produces large quantities of copper, diamonds, gold, oil, tin, tantalum, tungsten and zinc.
|Cobalt||0.84||3,5||Million tons||According to the USGS, the DRC "continued to be the world's leading source of mined cobalt, supplying more than one-half of world cobalt mine production".|
|Copper||1.06||20||Million tons||Production of copper in the DRC reached 1.1 million tons in 2014 according to the EITI report.|
|Diamond||15.75||150||Million carats||DRC is one of the world's leading producers of diamonds.|
|Gold||31.87||Thousand kilogram||Gold production quadrupled in 2014|
Source: Production figures are from the 2015 DRC EITI Report. Identified reserves are from the U.S. Geological Survey, Mineral Commodity Summaries, January 2018.
The main government entities that collect revenues are the DGI, the DGDA and the DGRAD. Substantial revenues are also collected by SOEs and at the local level by the authorities of the Haut-Kantaga and Lualaba provinces. The 2016 EITI Reconciliation Report showed that USD 756 million or 67% of total revenues generated by the sector were transferred to the Treasury. The remaining 33% were withheld by SOEs and tax collecting agencies.
Article 175 of the Constitution stipulates that 40% of the national revenue should be allocated to the province. Article 242 of the 2002 Mining Code provides for a sharing mechanism of mining royalties paid to the Treasury by holders of mining exploitation titles. The sharing arrangements was as follows:
- 60% of the revenue of income kept by Central Government.
- 25% of the revenue should be paid to an account designated by the Administration of the Province where the project is located and 15% of the revenue should be paid to an account designated by the City or the Territory within which operation takes place.
- 15% should be transferred to decentralised local entities.
DRC EITI took steps to try and clarify whether this revenue sharing formula was applied in practice, including through multi-stakeholder workshops and a standalone study. Findings showed that revenues were never disbursed in accordance with the regulatory framework. Civil society organisations in particular actively pushed for more clarity on the disbursement of revenues derived from mining royalties. As a result, the 2018 Mining Code modified the mechanism for transferring payments to local governments as set in its article 242, opting for direct payments from companies from July 2018 onwards. The CongoMines website has regulalry published mining royalty payments made by mining companies, allowing to verify the amounts that should have been transferred to provinces and decentralised local entities.
The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.
- The EITI DRC launched a pilot project to disclose beneficial ownership and establish a public register of beneficial owners.
- Two scoping studies were conducted in 2015 to expand EITI reporting to artisanal and small-scale mining (ASM) and forestry.
- To facilitate the collection of data from over 200 companies, the EITI DRC launched an online software to automate reporting by companies and government entities and reconciliation of data.
- To address stakeholder concerns around the management of extractive revenues by state-owned entreprises, DRC EITI published a standalone report based on a review of nine SOE's financial statements.
- Discussions between civil society and company representatives led to the adoption of a repository and a template for disclosing social expenditures.
- The 2018 Mining Code includes provisions about the traceability of mining revenues, transparency in the award of mining rights and the disclosure of beneficial ownership, as pushed for by DRC EITI stakeholders.
Oversight of EITI is ensured by a multi-stakeholder group, the "Comité executif"/Executive Committee, chaired by the Minister of Planning. Prime Ministerial Decree 09/27 of 16 July 2009 regulates EITI implementation in the DRC. Executive Committee members and the National Coordinator are nominated by decree. Ministerial Decree 0186 of 23 March 2012 obliges companies to disclose under the EITI. The day-to-day implementation is ensured by a technical secretariat in Kinshasa and Lubumbashi. Minutes of MSG meetings are published on the EITI DRC website.
The DRC's Validation against the Standard was scheduled to commence on 1 July 2018. Following the deadline extension request submitted to the EITI Board on 30 June 2018 by the EITI DRC multi-stakeholder group, the Board granted the extension of the Validation deadline. The DRC's Validation began on 1 October 2018. The International Secretarit will take into consideration, to the extent possible, all publicly available information up to 1 October 2018. The country is compliant under the 2011 Rules and the 2013 Standard.
For the fiscal year 2016, the DRC EITI multi-stakeholder group tasked the national secretariat to collect context (non-financial) data about the extractive sector, as per the 2016 EITI Standard. The draft report was improved through wide consultations with stakeholders and adopted in July 2018. This 2016 Supplementary Contextual Report followed in September 2018,
For the fiscal year 2016, the DRC EITI multi-stakeholder group tasked the national secretariat to collect context (non-financial) data about the extractive sector, as per the 2016 EITI Standard. The draft report was improved through wide consultations with stakeholders and adopted in July 2018. A 2016 Supplementary Contextual Report followed in September 2018, focusing primarily on revenues collected and managed by state-owned enterprises, and a 2016 Reconciliation EITI Report was adopted in December 2018.
The Annual Progress Report provides an overview of all EITI Democratic Republic of Congo's activities from January 2017 to June 2018.
The work plan presents all activities EITI Democratic Republic of Congo is planning for the period in question.
The law replaces an earlier code from 2002. It raises royalties on minerals and removes a clause that protected miners from changes to the fiscal and customs regime for 10 years.
This EITI Report covers Democratic Republic of Congo's extractive sector in 2015. It was published in December 2017.
This EITI Report covers Democratic Republic of Congo's extractive sector in 2014. It was published in December 2015.
An outline of the steps leading to beneficial ownership disclosure by 1 January 2020.
Report from the DRC civil society monitoring of the EITI process., evaluating adherence to the ToR for the MSG, the EITI Standard and making recommendations for improvements.
This EITI Report covers Democratic Republic of Congo's extractive sector in 2013. It was published in July 2015.
This EITI Report covers Democratic Republic of Congo's extractive sector in 2012. It was published in December 2014.