THE Democratic Republic of Congo (DRC) has created a state-owned monopoly that will buy cobalt mined by its rapidly developing artisanal sector, said Bloomberg News citing a previously unreported government edict issued in November.
According to the newswire, the creation of the company is a signal the state wants to play a greater part in its base metals industry. Cobalt, a mineral prized for its application in the manufacture of batteries, is rarely found outside the DRC.
The impact of the state-owned company on the cobalt industry, assuming it is a success, is unknown, but an analyst told Bloomberg it might be negative.
It could “… hinder the ability of artisanal mining to balance the market,” said George Heppel, senior analyst at business intelligence firm CRU Group. “We don’t think the government can get material to market as efficiently” as the traders currently purchasing the ore, he said.
Companies that smelt cobalt concentrate might also be forced to buy from the state-owned company, said Bloomberg News.
It added that the government order to create the company was designed to allow DRC to control the whole value chain of the artisanal industry. The country has insufficient control over the price despite its strategic position, the government said.
Artisanal output soared when the cobalt price rallied in 2017 and early 2018, providing as much as 20% of the DRC’s production, said metals trader Darton Commodities. Congolese officials put the figure as high as 30%.
