What do the moves by the Democratic Republic of the Congo (DRC) to boost its share of the country’s cobalt bounty have in common with the former Thai government’s attempts to control the global market for rice exports?
Both are examples of dominant producers of a commodity trying to extract more wealth from that position.
It’s also likely that similar to the ultimate disaster that befell ousted Thai prime minister Yingluck Shinawatra, the DRC’s attempts to extract more from cobalt will unleash a wave of unintended consequences, none of which will be positive for the government in Kinshasa.
Cobalt has gone from a minor metal with an almost non-existent public profile to the major threat to the future of the switch to electric vehicles and battery storage for electricity.
This is because cobalt is a key ingredient in the current technology lithium-ion batteries essential for both cars and electricity storage, and the DRC produces more than half of the world’s supply.
The DRC is hardly a paragon of stable government, with President Joseph Kabila still refusing to hold elections even though his term expired two years ago.
Much of the country remains beyond the control of the central government and its recent history has seen numerous conflicts that involved several neighbouring countries and various armed factions.
However, Kabila’s government has made it clear that it now wants a greater share of the revenue from its vast reserves of cobalt, with the country producing 73,940 tonnes of the metal last year, a jump of 15.5 percent from 2016.Parliament has approved a new mining code that increases royalties five-fold to 10 percent, and removes a stability clause in the current law that protects miners from changes to the fiscal and customs regime for 10 years.The code still has to be signed into law by Kabila, and miners active in the country, including Glencore and Ivanhoe Mines, are lobbying for changes and talks about future taxation arrangements.The DRC’s state-owned miner Gecamines also wants to re-negotiate contracts with international partners to secure a bigger share of revenues.
