A proposed revision to the Democratic Republic of Congo’s (DRC) mining code could classify cobalt as a strategic substance, essentially resulting in a tax hike, Mines Minister Martin Kabwelulu has said.
The new mining code has already been passed by the lower house and is now being reviewed by the upper house for possible approval.
Under the country’s current mining code, cobalt is classified as a base metal, alongside copper. If the proposed revision goes through, cobalt will be taxed at rate of 5 percent, more than double the current 2 percent.
Demand for cobalt is set to increase sharply as it is used in the making of lithium-ion batteries, which are used to power electric cars and mobile phones.
Electric cars are increasingly being proffered as many countries move away from fossil fuels to meet emissions targets.
Volkswagen AG for instance plans to invest 20 billion euros ($24 billion) by 2030 to roll out electric vehicles, with another 50 billion euros earmarked for batteries.
Volvo Car AB on the other hand says it will have five electric models in its lineup by 2021, while Daimler AG, the owner of Mercedes-Benz, is investing $1 billion to ramp up electric-vehicle production in the U.S.
DRC is Africa’s leading copper producer and the world’s leading cobalt producer. It supplies 63 percent of the world’s cobalt.
Yet the most recent Human Development Report ranks the DRC 176 out of 188 countries, with a life expectancy of 59 years and 77% of the population living below the income poverty line.
The revision of the DRC mining code was proposed in 2015 but its adoption process was halted in March 2016 due to various objections from mining firms which complained about the fact that it would impact the profitability of investments made in the sector.
But the government reintroduced the proposal in May, saying it was essential to enhance its public.Authorities consider the previous mining code to favour foreign investors at the expense of the economy.