DRC to Raise Cobalt Concentrate Export Tax to $100 per MT

After announcing in April that it would be banning the export of copper and cobalt concentrate in July or August, the Democratic Republic of the Congo (DRC) has now revealed it will be delaying the ban until next year.

“The moratorium is until Dec. 31, 2013,” Martin Kabwelulu, the DRC’s mines minister, told Bloomberg in a text message.

For many, it is no surprise that the ban is being pushed back. Aimed at encouraging miners to refine and process the affected metals within the DRC, since its announcement skeptics have stated that the region simply does not have enough electricity to run processing plants.

Perhaps most notably, Moise Katumbi, governor of the DRC’s Katanga province, said back in April that he would not support the ban, commenting, “[i]f you don’t have enough electricity you can’t process the concentrates, and as the state we need to furnish electricity to miners. They’ll continue to export concentrates until there’s enough electricity.”

Interestingly, the alternative to the ban that is being pursued is one that Katumbi employed when the DRC banned the export of concentrated minerals in 2010: taxation. Cobalt concentrate exports from the DRC will now be subject to a tax increase of $40 per metric ton (MT), according to Metal-Pages. That means that after July 15, duties will rise to $100 per MT.

Market participants are not in agreement about whether the tax will affect prices, Metal-Pages states. Some believe that prices will initially rise by 40 to 50 cents, but others think that “the availability of material will thwart another potential round of increases.”

Since the ban’s announcement, cobalt prices have seen an uptick. Cobalt 99.3 percent is currently selling for $13.60 to $14.50 per pound, while cobalt 99.6 percent is going for $14 to $15 per pound, said Metal-Pages.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Related reading: 

DRC Bans Exports of Copper and Cobalt Concentrates

Three Critical Takeaways from the Congo’s Cobalt Ban

DRC’s Confidence in Cobalt Export Ban May be Misplaced