It’s official – the Congo is raising royalties on cobalt and it’s going to hurt Aussie miners.

The Democratic Republic of Congo has labelled cobalt a “strategic” metal and slapped a 10 per cent royalty on it.

That is almost triple the 3.5 per cent previously levied on the battery metal.

News emerged this week that Prime Minister Bruno Tshibala has now signed a decree despite strong opposition to the hike to royalties by majors active in the region like Glencore and China Molybdenum.

In August, miners operating in the DRC formed a new body called the Mining Promotion Initiative (MPI) to engage with the government on industry concerns about the new mining code.

The decision to hike cobalt royalties will make it more costly for ASX-listed miners with projects in the Congo that are already in production or moving towards production.

Over 60 per cent of the world’s cobalt is mined in the Congo and there are already issues plaguing the supply of the battery metal from the country because of reports of the use of child labour to mine it.

Miner and commodities trader Glencore is facing pushback from its cobalt customers and has blamed contract “non-performance” amid weaker prices in the second half for lower earnings.

Junior explorer Nzuri Copper (ASX:NZC) is trying to bring a copper and cobalt mine called “Kalongwe” into production in the Congo.

Stockhead columnist Tim Treadgold reported earlier this week that if Kalongwe was located anywhere other than the Congo it would be a genuine rock star given its attractive financial metrics.

>>Tim Treadgold: Will this second time be the one for Nzuri?

But like other miners working in the country, Nzuri came up against a controversial new mining code that has posed problems for projects in development.

Tiger Resources (ASX:TGS), meanwhile, is already producing copper at its Kipoi project and it wants to produce cobalt as well, but the company doesn’t yet have the facilities in place to extract the cobalt.

An increase in the royalty will make it more difficult to get funding to build a cobalt plant, executive chairman David Frances told Stockhead in September.

“Obviously cobalt prices are reasonably buoyant, and you can probably cope if you’re already in production, but if you’re looking to now build a cobalt plant, then obviously it makes it more difficult to finance those kind of capital builds because the returns are much lower,” he said.

Other juniors with cobalt projects in the Congo include Red Mountain Mining (ASX:RMX), Cape Lambert Resources (ASX:CFE), FE Limited (ASX:FEL) and Taruga Minerals (ASX:TAR).

The Australia-Africa Minerals & Energy Group (AAMEG) has been watching the situation closely and previously flagged it would go into bat for Australian miners if things got out of hand.

“We’re not happy with the code changes as it is, but everyone is trying to work together,” Bill Witham, head of AAMEG told Stockhead, previously.

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