Gecamines, the Democratic Republic of Congo’s (DRC) state miner, is looking to gain more control of the cobalt market and will renegotiate contracts with its mining partners this year.
Chairman Albert Yuma said on Monday (February 5) that existing deals with foreign companies do not give Gecamines or the state “a sufficient share” of the nation’s mineral wealth.
“We therefore call for a rethink of our past partnerships to enable them to achieve the only purpose for which they were signed: to provide benefits for the state and Gecamines,” Yuma added.
The revisions should start in the second quarter and are expected be completed by year end or the start of 2019. The state-owned company has mining partnerships with Glencore (LSE:GLEN), China Molybdenum (HKEX:3993) and Ivanhoe Mines (TSX:IVN).
The DRC is the world’s top cobalt producer, with more than 50 percent of global output mined in the country. The need for cobalt, a critical element in the lithium-ion batteries used to power electric cars, is expected to surge in the coming decades.
“I find it scandalous that when cobalt is discussed, and the explosion of electric vehicles, only the traders and consumers are referenced and Congo and Gecamines are not cited,” Yuma told Bloomberg.
The market seems to think that “the future of cobalt is in the hands of Glencore, Trafigura and CMOC but not the Congo or Gecamines,” Yuma continued. “We legitimately want to control the cobalt market because it is ours.”
The company is in talks with battery and car manufacturers, which Yuma declined to identify. Consumers want to secure stable, long-term supply and, unlike traders, don’t speculate on price, he noted.
Gecamines’ move comes at an unstable time for miners in the DRC. Last week, Congress passed a new mining code that is set to increase taxes and royalties on cobalt and other metals. The new legislation could negatively impact miners, although it has yet to be signed off on by President Joseph Kabila.
Mark Bristow, CEO of Randgold (LSE:RRS), which produces 45 percent of its gold in the DRC, said that higher royalties would discourage investment. However, his key objection is that the new code dispenses with a clause in the previous charter that protected miners from changes for 10 years.
Miining companies operating in the African country are already working to challenge the revised law.
“We are engaging with everyone from the top to every ministry — prime minister to ministers of mines, ministries, civil society, senators, parliamentarians, foreign lenders, the whole nine yards,” Bristow said.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.