Published: February 6, 2018 |

[Click image to enlarge]

FT reported that Democratic Republic of Congo is heading for a stand-off with some of the world’s largest mining companies after legislators passed a revised mining law that is set to increase taxes on cobalt, an important metal for electric vehicle batteries.

Under the amended legislation, royalties for cobalt could rise from 2 percent to 10 percent just as global carmakers look to secure supplies of the metal to meet ambitious targets for production of electric vehicles. The law, which parliament passed at the weekend, also sets higher tax rates for copper and gold in the resource-rich country.

The chief executives of Glencore, the Swiss-based commodities group, and Randgold, the UK-listed gold miner, have both traveled to the DRC to oppose the new law, which still has to be signed by President Joseph Kabila.

Elisabeth Caesens, of Resource Matters, a Brussels-based non government organization said that “One can expect unprecedented lobbying efforts from the sector to change the president’s mind before he signs the revised mining code into law.”

If signed by Mr .Kabila, the revision of the 2002 law could substantially raise revenues for his government as it prepares for elections in December. About USD 10bn worth of copper and cobalt is exported from the DRC every year.

The 2002 law was an attempt to increase transparency and predictability for foreign mining companies in the DRC, after years of civil war following the fall of former dictator Mobutu Sese Seko in 1997.

It contained a clause that stated that mining companies would be protected for 10 years if any changes were made to the law. But the revision passed by parliament says that the new royalty rates, as well as other measures, will take effect immediately.

George Heppel, an analyst at consultancy CRU in London said that “It will affect the [miners’] bottom line and it will be passed on to the consumer.”

Glencore, Canadian mining company Ivanhoe and Randgold wrote a joint letter in December opposing the revised mining code. This month Randgold’s chief executive Mark Bristow warned during a visit to the DRC’s capital Kinshasa that it would cripple the country’s economy.

The revision to the law comes as the country is embroiled in a political crisis triggered by Mr Kabila’s refusal to step down as president in December 2016 at the end of his constitutional mandate.

Under a deal brokered by the influential Catholic church, elections were meant to happen last year but this timetable has slipped to December this year. Many groups, including the Catholic church, believe Mr Kabila wants the election delayed again.

Bishops have accused the government of “barbarism” in causing the deaths of peaceful demonstrators last month who were demanding the election be held this year.

Source: Financial Times

Be in-the-know when you’re on-the-go!