Democratic Republic of Congo is considering more than doubling royalties on cobalt, a key ingredient in lithium-ion batteries, under a new mining code nearing parliamentary approval, the mines minister said on Wednesday.
Nearly two-thirds of the world’s cobalt comes from Congo. Demand for the metal has surged due to expected growth in the electric vehicle sector, causing the price on the London Metal Exchange to triple over the last two years.
A proposed revision to Congo’s 2002 mining code, which was approved by parliament’s lower house last month and is now being considered by the upper chamber, would increase royalties across the board and impose a 5% royalty on “strategic metals”.
Mines Minister Martin Kabwelulu told Reuters in a text message that the government would consider designating cobalt a strategic metal once the law had passed. He did not reply to a follow-up question asking how that determination would be made.
Under the existing code, cobalt is charged a 2% royalty as a base metal alongside copper, of which Congo is Africa’s leading producer. The royalty on base metals would increase to 3.5% under the revised code.
Mining companies operating in Congo, including Glencore and Randgold, argue that the proposed code, which would also increase certain taxes and the state’s share in new projects, would make investments in the sector unprofitable.
But the government says the proposed rates are lower than in competitor nations such as neighbouring Zambia and that the measure is essential to boosting meager public revenues.