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Kinshasa – Mineral commodity prices are ticking up once more, and the cash-strapped Congolese government is increasingly betting on rising mining revenues to come to its fiscal rescue. Because of the budget deficit and a shortage of foreign exchange, the central bank has been putting pressure on mining companies to repatriate 40% of their export earnings pursuant to a 2007 government decision.
That, and a proposed reform to the mining code, have caused tensions between the Kinshasa government and the country’s mining companies. On the production and price fronts, things are looking up now. Copper prices currently hover around $7,000/tn, sharply up from $4,500 just a year ago. And, improving matters further, the country’s recorded copper exports were 15% higher during the first half of 2017 than during the same period of 2016.
The cobalt price is rising too, buoyed by recent announcements by governments around the world, including the UK and China, of their plans to switch from petrol and diesel vehicles to electric cars. The London Metal Exchange cobalt price was $27/lb in October 2017, up from $13/lb a year earlier.
Cobalt is an important component of vehicle batteries, with each battery containing an estimated 5-15kg of the metal. By 2030, global cobalt demand is anticipated to be nearly 50 times higher than what it currently is, and the Democratic Republic of Congo (DRC) is home to more than 60% of the world’s cobalt reserves.
As a result, Congolese miners have been busy. The central bank reported that copper production jumped 9.3% in the first nine months of the year, hitting 831,000tn. Cobalt and gold production rose, 18% and 5.7%, respectively. The net effect was a hefty 60% increase in commodity export receipts from the DRC during the first half of 2017 compared to the first half of 2016, to more than $6bn.
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