Picture: REUTERS
Picture: REUTERS

The Democratic Republic of Congo’s (DRC’s) government will soon announce which minerals are to be designated "strategic" and subject to a 10% royalty rate, the mining minister said.

The DRC’s updated mining code, signed by President Joseph Kabila in March and applied since regulations were finalised in June, introduced new taxes and hiked royalties on all metals — including raising copper and cobalt to 3.5% from 2% and gold to 3.5% from 2.5%. The law also established the category of "strategic" minerals, to which a rate of 10% will apply, though the state has not yet identified which metals will be affected.

"A decree from the prime minister will be able to do it very soon," minister Martin Kabwelulu said by e-mail on Friday. "My experts are working on it."

The mining code is contested by major investors including Glencore, China Molybdenum and Randgold Resources, which have said they may launch international legal challenges against the reforms if they aren’t softened significantly. A particular source of anger is the cancellation of a 10-year stability clause, present in the superseded law from 2002, which would have protected miners against fiscal modifications until 2028.

Cobalt and tantalum

Kabwelulu said in January that cobalt, a once obscure byproduct of copper and nickel mining but now a key component in electric batteries, could be categorised as "strategic". The metal’s importance and value has soared in recent years, driven by growing global demand for electric vehicles. In 2017, the DRC’s mines were responsible for two-thirds of the world’s cobalt output, or 81,000 tonnes.

"The revised mining code provides that if the international economic situation demands it, the head of government may, in the interest of the state, declare certain mineral substances as ‘strategic substances’," Kabwelulu said in January. The old law did not "authorise the government to classify cobalt or tantalum as a strategic substance," he told legislators, saying cobalt has "not only a strategic but also a critical character" on the world market.

The DRC also produced about a quarter of all tantalum mined in 2017.

Glencore and China Moly would be among the companies most affected by any decision to make cobalt strategic. Glencore’s Mutanda unit was the world’s largest cobalt miner in 2017, producing more than 23,000 tonnes, according to Darton Commodities, and is set to be overtaken by Kamoto Copper, which is also controlled by the Swiss commodity giant. China Moly owns Tenke Fungurume Mining, which mined almost 17,000 tonnes of cobalt in 2017.

The DRC should "be able to enjoy the benefits of cobalt’s global importance", Jacques Kamenga, the MD of state mining company Gecamines said at a conference in the southeastern town of Kolwezi on September 12. "Considering cobalt as a strategic product, as stated by the new mining code, is a first step," he said.