The Democratic Republic of Congo has classified cobalt a “strategic” substance, meaning miners will pay nearly three times the royalty rate than before on the key component in electric vehicles batteries. The rate is now at 10 percent, states a government decree.
The move had not come entirely unexpected. The DCR had considered raising royalties back in January reportedly. Back then Parliament had discussed a 5 percent tax yet it is now at 10 percent.
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.
The tax raise has led to opposition from investors including Glencore and China Molybdenum, who have lobbied against the new mining code adopted earlier this year – to no avail.
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On another note, BMW, BASF, Samsung SDI and Samsung Electronics launched a cooperative pilot project to support sustainable and fair cobalt mining initiatives in the Democratic Republic of Congo last week. The German development agency GIZ will coordinate the project and also include small local miners who work under particularly dangerous conditions.
Before they became “strategic”, the minerals were all subject to a royalty rate of 3.5 percent, an increase over the 2 percent rate in Congo’s previous mining code.
Cobalt plays a key role in the production of batteries for electrified vehicles. The resource is also a rare element, with only about 0,004% of the earth’s crust holding the mineral. Additionally, about two thirds of the global supply are located in Congolese territory.