Democratic Republic of Congo President Joseph Kabila announced that he would sign into a law a new mining code that will impose higher royalties on cobalt, copper and gold. Royalties on cobalt could rise to 10 per cent if it is determined as “strategic” by the Kabila government, up from 2 per cent currently.
Congo is the world’s leading producer of cobalt, supplying more than 60 percent of the metal to the world. In recent years, demand for cobalt, a primary component in batteries for electric cars has risen sharply. The new mining code will likely lead to high costs for consumers.
The announcement followed a nearly six-hour meeting between Kabila and mining executives in Kinshasa about the new code, which will raise taxes and remove a stability clause in the current law protecting miners from changes to the fiscal and customs regime for 10 years, Reuters reported.
“The president of the republic assured the miners ... that their concerns will be taken into account through a constructive dialogue with the government after the promulgation of the new mining law,” a joint statement said.
Glencore, Randgold and China Molybdenum all operate mines in Congo, Africa’s top copper and cobalt producer, and have said the changes in the code adopted by parliament in January would scare off new investment and violate existing agreements. Ivanhoe is developing a mine and upgrading another that is not currently in production.
Mining executives declined to answer questions from reporters after the meeting, with Randgold Chief Executive Mark Bristow saying they had “work to do.”
Mines Minster Martin Kabwelulu told reporters after the meeting that the companies’ concerns would be treated on a “case-by-case basis”.
“After the promulgation of the code, we are going to wait for the mining companies ... to send us their concerns,” Kabwelulu said. “We are going to re-examine those concerns, first with (government) experts ... and with the mining companies’ experts.”
Participants in the meeting included Bristow, Glencore CEO Ivan Glasenberg, China Molybdenum executive chairman Steele Li and Ivanhoe chairman Robert Friedland.
Randgold, which operates the giant Kibali gold mine in northeastern Congo, said last month that it would challenge the new code through international arbitration if it was not referred back to the mines ministry for further consultation with industry.
The government has disputed the companies’ claims that the new code will make them unprofitable and said the revision is needed to boost meager public revenues in a country with an annual budget of only about $5 billion.
Under one provision in the proposed code, royalties on cobalt, a vital component in electric car batteries, could increase fivefold to 10 percent. The law will also introduce a windfall profits tax.
Congo is the world’s biggest source of cobalt. Its output jumped 15.5 percent last year to 73,940 tonnes.