The Democratic Republic of Congo’s cobalt as well as other minerals are set to get higher royalties as at next week. This is after the prime minister signs a decree to designate the minerals as “strategic”.
The mines Minister Mr. Martin Kabwelulu said that this change is part of a new mining code. On the other hand, companies such as Glencore and Randgold oppose the code as it axes tax exemptions and hikes royalties and profit taxes. They have since been holding out the hope that it might be watered down in further negotiations.
Furthermore, the government is yet to formally announce which metals will be classed as strategic in the new code and subject to royalties of 10%. Before the code was introduced, companies paid a rate of 2% for cobalt. They will now be subjected to pay 3.5% under the new code.
The government considers minerals with the “strategic” designation important for the economic, social and industrial future of the country. The new code came into effect in June of this year. Meanwhile, companies are of the opinion that its tax hikes and cancellation of 10-year exemptions for existing projects against changes to the previous fiscal and customs regimes breach previous agreements with the government, and will deter further investment.
On the other hand, Kabwelulu insisted that all companies are to pay the royalties and taxes as stipulated by the new code. This is despite Randgold’s statement last month on claims of negotiations on the same.
Democratic Republic of Congo is Africa’s top copper producer and the world’s leading miner of cobalt, a mineral which has seen a surge in demand due to the manufacture of electric car batteries and mobile phones. Big mining firms with investments in Congo include AngloGold Ashanti, Ivanhoe Mines, China Molybdenum, Zijin Mining and MMG.