KINSHASA (Reuters) - Democratic Republic of Congo has declared cobalt a “strategic” substance, a government decree showed on Monday, nearly tripling the royalty rate miners will pay on the key component in electric batteries to 10 percent.
Prime Minister Bruno Tshibala signed the decree, which is dated Nov. 24, despite fierce opposition from leading investors including Glencore and China Molybdenum, who have lobbied against tax hikes under a new mining code adopted earlier this year.
The 10 percent royalty rate will also apply to coltan, which is used to power electronic devices, and germanium, which is used to make transistors.
Before they were designated “strategic”, the minerals were all subject to a royalty rate of 3.5 percent. That was already an increase over the 2 percent rate in Congo’s previous mining code, which was in effect until June.
Congo is Africa’s top copper producer and mines more than 60 percent of the world’s cobalt. Foreign investors say the tax hikes under the new code will deter further investment and have threatened to challenge some parts of the regulation in arbitration.
Cobalt prices surged over the past two years, due largely to demand for electric cars, but have fallen more than 40 percent since March due to a surplus of cobalt chemicals.
Reporting By Stanis Bujakera and Giulia Paravicini; Writing by Aaron Ross; Editing by Adrian Croft