After a moment to have a cup of tea & digest this news** My gut...

After a moment to have a cup of tea & digest this news**

My gut feeling on this? Glencore is trying to squeeze the DRC government by demonstrating just how much revenue their operations bring to that government.

This would not have happened voluntarily & isn’t it interesting that they ‘find’ this issue while negotiating with the government over royalties etc? The DRC gov. almost 100% would not have found the problem or have been worried about it if they did anyway.

My gut says this is a ploy. A ploy to improve the eventual return on their cobalt ( sale pitch: ‘hey our cobalt is now even cleaner!’ ), by hopefully reducing their royalty payments to the government & of course pushing up the price of cobalt in the short term.

The government ( any nation ), has several ‘levers’ they can pull when it comes to mining.
1. Taxes/royalties.
2. Operating guidelines.
3. Provision of security in dangerous regions ( oh- you’re arguing with the government & have noticed that the security in your mine’s area suddenly disappeared, how very strange!’ ).
4. Port restrictions ( ‘oh sorry mate, your dirt has too much dirt in it- we won’t accept that!’ ).
5. Accuse mine operators ( this is especially effective when dealing with multinationals operating in poorer parts of the world ), of exploiting either the environment or local people.

There are others of course but these are the standouts.

From the miner’s side of the table?
1. Reduce activity at mine so the money paid to government is reduced.
2. Shut down completely.

We see from this that on balance the ball is always in the government’s court.
If that government is run by people who don’t care when their own people are starving? How can one imagine they will worry at all if a foreign company loses money? Not with any logical rationale, that’s for sure.

Glencore will lean on their faithful investors.
The DRC government will lean on their own people.

Neither really care about what happens to the little people & that basic truth is borne out time & time again. This is when the better players ( ARL for example ), in stable operating environments start to stand tall.

The most important point we can see from all this drama?

Quality always shines through, even if it seems that it’s being ignored at times.