You are currently viewing our desktop site, do you want to visit our Mobile web app instead?
 Registered users can save articles to their personal articles list. Login here or sign up here

Here’s why you might want to watch the DRC election

More than 60% of the world’s supply of cobalt is mined in the Congo.

The Democratic Republic of Congo’s December 30 election has attracted much attention from the international community as the nation looks set to have its first peaceful transition of power since gaining independence from Belgium in 1960.

The front-runners were Martin Fayulu, Emmanuel Ramazani and Felix Tshisekedi. Fayulu was seen as a favourite to win the presidential poll after emerging as the opposition’s pick to contest against Kabila’s Ramazani.

More importantly, two of Kabila’s staunchest opponents, Jean-Pierre Bemba (former Vice President) and Moise Katumbi backed the outspoken Fayulu. For many, the 62-year-old presented a perfect balance of Anglophone and Francophone Africa – educated in the USA, and having risen to Director-General at US oil giant Exxon Mobil.

The other face of the opposition was Felix Tshisekedi, son of Étienne Tshisekedi who, in 1982, founded the country’s first opposition party. To this day, he is revered as the man who had the nerve to go toe to toe against President(s) Mobutu Sese Seko, Laurent Kabila, and Joseph Kabila.

Lastly, there was Emmanuel Ramazani who was personally handpicked by Kabila to succeed him. While both Felix Tshisekedi and Fayulu agreed to be part of an opposition coalition that initially agreed to front a single opposition candidate for the December poll, Tshisekedi backed out of the coalition agreement just two days after Fayulu was announced the opposition’s unity candidate. The result was that neither Tshisekedi nor Fayulu emerged the overall winner, and Fayulu has challenged the results.

But why should you care what happens in a country that, to this day, does not have a tarmac road connecting the Eastern City of Goma to the Western capital Kinshasha?

Congo’s Cobalt and your smartphone

The DRC accounts for two-thirds of global production of cobalt, which is a primary ingredient in rechargeable batteries, used in smartphones. It is safe to assume that your smartphone is running a battery with cobalt from the mines in the “copper belt” of the South Eastern provinces of the DRC. With the exponential demand for the resource, cobalt prices have gone up over 200% in the past two years.

The fast emerging electric vehicle space has also driven up demand as car makers race to develop an affordable battery that recharges in the shortest time possible. 

Following the disputed poll, many political commentators have dispelled ideas of hasty policy reform in the DRC, specifically in its mining sector. “It is anticipated that Tshisekedi will not change the mining code as DRC’s mining sector has largely been shielded from political turmoil so changes to current cobalt output in the country are not anticipated,” says Ryan Cummings, director of Africa Management Consultancy at Signal Risk. “This could however change based on the prevailing contestation of the election result.”

Cobalt demand surge in the past three years. Source: Glencore Plc

If more than 60% of the world’s supply of cobalt is mined in the Congo, then civil unrest of any kind would affect global tech stocks ranging from Apple, Huawei and Samsung. However Apple is reported to have secured a cobalt sourcing agreement with local miners in the DRC late last year.

Back in the Congo, the Kabila government last year surprised many when it determined that cobalt was a “strategic” substance, meaning that the mineral will attract nearly three times the royalty than before. (The rate is now at 10%).

The question is, will a new government review this steep royalty? “Given that president-elect Felix Tshisekedi will face a legislature which as per most recent election results will be dominated by the ruling Common Front for Congo, any attempts at amending legislation, passed by the Common Front for Congo prior to the vote, will be difficult to pass through Parliament,” reasons Cummings.

“Moreover, if it is indeed claimed that Tshisekedi’s victory in the election was due to the brokering of an agreement between the Union for Democracy and Social Progress and FCC, it is more than likely that Tshisekedi will maintain the socio-political and economic framework employed by Kabila during his tenure.”

The latest 10% royalty rate will also apply to coltan, which is used to power electronic devices, and more importantly, germanium, which is a vital ingredient in transistor manufacturing. Following the announcement of the strategic tax, Glencore was quick to air its displeasure and threatened to contest it through international arbitration.

Some believe that a Fayulu presidency (a former ExxonMobil executive) would offer mining companies a laxer mining code. “Glencore and Randgold Resources have criticised the revised code but they are the biggest winners here if Fayulu manages to get the top seat. A particular source of anger is the cancellation of a 10-year stability clause, present in the superseded 2002 law, which would have protected miners against fiscal modifications until 2028,” says Jean Pierre Chande, a commodity trader with Cobalt Congo.

“A new president like Fayulu who has worked for a global oil company might be softer on the mining companies.”

Meanwhile, Glencore would be the most affected if the cobalt royalty rates are not amended as its Mutanda unit remains the world’s largest cobalt miner, mining north of 23 000 tons per annum.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

AUTHOR PROFILE

COMMENTS   7

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

Who cares??? Just another failed African state. It should actually be one of the wealthiest countries in the world considering its estimated mineral wealth of US$42 trillion. It should have been the Superpower in Africa to balance the US and China in the world. However, the DRC ranks 176th out of 188 countries on the UN Human Development Index.

Funny how people notice all Africa’s failing states but fail to see how the western powers have robbed the continent blind of its resources and minerals

And it is funny how other people are always blamed for Africa’s ills except the African leaders themselves. Since the DRC already became independent in 1960, they have imposed high tax rates on mining companies and additional withholding taxes on all payments to non-residents. At one point the coporate tax rate was as high as 40% but strangely only a select few benefited like the Great Plunderer Pres Mobuto Sese Seko who stole an estimated US$4 billion. What is also funny is that the international community spends more than $1-billion each year retaining the United Nations Organisation Stabilisation Mission in the Democratic Republic of the Congo (or Monusco) since 1999. To this bill should be added the approximately $1-billion for each of the country’s two democratic elections in 2006 and 2011, and nearly $50-billion in official aid since 1999. But like you say, just blame other people.

What utter twaddle!

Thanks for clear response, i am an african and i believe african robbed them selves of honour and dignity and progress and prosperity
in our face china emerge india is emerging and japan stand yet african blame other shame

URGENT, QUICK AND SIMPLE SOLUTION FOR DR-CONGO

La Libre Belgique, a Belgian Newspapers has just confirmed that Felix Tshisekedi has lied in his application for the DRC presidency with a fake diploma from a Belgian College, therefore betraying the trust of 80 millions Congolese. To see the proof, just go to Google and search “Tshisekedi fake diploma” in English or French “le faux Diplôme de Félix Tshisekedi”

Therefore, instead of re-counting the votes, the DRC constitutional Court needs to be told to simply invalidate Felix Tshisekedi presidential candidacy for fraud, trahison and deception.

To reach there the media needs immediately to speak loudly about this situation and use any means to push the court to act.

Another way to do this is to fund Congolese people to collect signatures (I do not know how many are needed) to bring to the Constitutional Court with the fraud evidences from Belgium and make Tshisekedi resign for fraud.
The mining companies and all people of Goodwill can support us

Take care
Lab Gislain

It is really a shame to read this from you my friend, you don’t come on social media with lies may God forgive because even yourself you know what you’re saying is a lie, why should you tell people to go on Google to search for felix fake diploma? Because on Google anyone can post anything I’m sure you have made false information against felix on Google and you want people to go and read your fake articles… I have all the information regarding felix diploma and it true that he studied there. Why Belgium don’t buplish that on their website, in fact I would be surprised if Belgium does publish that felix has a fake diploma, because Belgium and France are working hand to hand for their individual interests in Congo soil, my friends count how many year UN soldiers are settling in Congo soil so saying to put peace, have question yourself why our people are still being raped and tortured while the so-called UN peace make are in Congo? Instead of you finding who is killing congo and how to make an end to that… You are going to the same people to ask them for a help, are you out of your mind?you want fayulu son of bemba and katumbi? All those people that have worked with kabila and killed their own people for their own interests? Come on now stop your nonsense. Tell us what happened in Genève how come fayulu pass ahead? Wasn’t that a betrayal act?

Load All 7 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

SHOP NEWSLETTERS TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: