Samsung buys Congo cobalt, page-27

FT article 2 hours Cobalt will be designated as a “strategic” metal under the Democratic Republic of Congo’s new mining code, clearing the way for royalties on the metal to rise as much as fivefold to 10 per cent, according to the prime minister. The country’s new mining code was signed into law by President Joseph Kabila on March 9 over the strong objections of international mining companies. “If we look at the situation today, cobalt — where a tonne cost $30,000 in 2007 and now goes for $85,000 per tonne — is a metal that is both rare and strategic, so the state wants to extract profit,” Bruno Tshibala, the prime minister, told the Financial Times in an interview. Cobalt is a key component in computer chips, mobile phones and lithium-ion batteries, demand for which is surging as vehicle makers ramp up production of electric cars. Congo is the world’s number one producer of the metal, accounting for more than half of known reserves. “We cannot accept a situation where, despite a price evolution for commodities, this does not profit the country, it only profits investors,” Mr Tshibala said. Under previous legislation, the government put a 2 per cent royalty on cobalt. The revised code will see royalties for base metals increase to 3.5 per cent. That would rise to as high as 10 per cent if a commodity is designated as “strategic”. The Congo’s cobalt output increased by 15.5 per cent in 2017, and the price of the metal has tripled since 2016. The decision to pass the new mining code came even after the heads of international miners Glencore, Randgold, China Molybdenum and Ivanhoe Mines travelled to Kinshasa, the capital, last week to lobby President Kabila against the new law in person. After the meeting was initially postponed, miners spent six hours with the president but failed to get him to back down. A statement after the meeting said: “The president of the republic assured the miners . . . that their concerns will be taken into account through a constructive dialogue with the government after promulgation of the new mining law.” The change in the mining code could bolster the coffers of the national government at a time when the country, the largest in sub-Saharan Africa, appears to be slipping back into crisis. After a decade of relative peace — following devastating regional conflicts in the 1990s and the first years of this century — conflict has broken out in several regions, including parts of the volatile east and the central district of Kasai. President Kabila, whose legal term ended in 2016, has continually delayed elections, exacerbating unrest in many parts of the country. Mr Tshibala reiterated a recent government pledge that presidential elections — in which Mr Kabila is ineligible to stand — would go ahead in December 2018. “The president will not perform any actions to stay in power, as he has indicated many times,” he said. The UN has warned that the situation in Congo is reaching “breaking point”. An estimated 4.5m people have been displaced by violence, some spilling over the border into neighbouring countries, including Angola and Uganda.