AEMA, coalition launch legal challenge to BLM Conservation and Landscape Health Rule
The American Exploration & Mining Association was joined by a coalition in filing a challenge last Friday in the Wyoming district court.
The Democratic Republic of Congo imminent law that more than double the tax miners operating in the country pay on exports of cobalt, will severely affect buyers of the metal, a key component in the lithium-ion batteries that power electric cars and mobile phones.
“Given the tight nature of the cobalt market at present, we would expect miners to attempt to pass through higher royalty costs to consumers,” Colin Hamilton, an analyst at BMO, said in a note quoted by FT.com.
British corporate advisor Numis Securities went even further, saying that higher royalties will deter investment in Congo, leading to skyrocketing cobalt prices.
New code has already been passed by both chambers of the parliament and will be promulgated “shortly,” DRC President Kabila said.
Trent Mell, President and CEO of Canada’s First Cobalt (TSX-V, ASX:FCC), agrees. He told MINING.com last month the new rules were just “one more reason” for investors like his company to look elsewhere.
The African nation, responsible for about two thirds of global cobalt output, has been evaluating a major revision to its 2002 Mining Code since December. Already approved by lawmakers, it’s just waiting for President Joseph Kabila to sign it into a law, which — as he said Wednesday after a meeting with mining companies — is ready to do “shortly.”
While the companies failed to persuade Kabila not to sign the law, “the president did promise to continue further discussions with us,” Jerry Jiao, CEO of MMG Ltd, one of the firms that attended the meeting, told Bloomberg.
The new mining code qualifies cobalt as a “strategic commodity” and so increases royalty on exports of that metal to 5% from 2%. Taxes on base metals, in turn, will rise to 3.5%.
Cobalt prices went ballistic last year, with the metal quoted on the London Metal Exchange ending 2017 at $75,500, a 129% annual surge sparked by intensifying supply fears and an expected demand spike from battery markets.
Top mining companies including Glencore (LON:GLEN), Randgold Resources (LON:RRS), China Molybdenum (HKG:3993) and Ivanhoe Mines currently operate in the DRC.
