The production shutdown in the largest cobalt mine, Mutanda Mining (MUMI), in the Lualaba province in DR Congo for at least two years, looks like a real blackmail by the Swiss mining giant Glencore to the Congolese government. And this, despite the negative impacts certain on the national economy, local communities and employees of this society valued at more than 3,000 people.

In a Southern Africa resource watch (SARW) analysis, civil society activists believe that Glencore is using the lower cobalt price to achieve two major goals.

Obtain the revision of the Mining Code

The approach of Mumi’s parent company seems to be aimed at forcing the hand of the new government, expected soon, for a revision of the mining code that the company has vowed to obtain.

« If the real objective of Glencore is to push for the revision of the mining code, the best attitude would be to wait for the new government to be set up to start discussions that could lead to adjustments to the mining legislation. Such discussions should not be bilateral; they should include all parties involved in the mining code review process that lasted from 2012 to 2018, « said SARW in an official statement.

These activists remain convinced that Glencore’s tendency to exert pressure at the limit of blackmail on the Congolese authorities, while jeopardizing the job security and well-being of thousands of workers and their families, must no longer be tolerated.

Escape from the fisc

As in 2015, says SARW, Glencore still wants to avoid paying the cobalt tax as strategic minerals as provided by the revised Mining Code. To achieve this, it proceeded by closing the mine pending the increase in the price of cobalt and the decline by the new government of the tax on this ore.

« Glencore’s behavior is only acceptable in a country that has lost control over its mineral resources. It is time for the Congolese State to resume its role of actor and regulator of the extractive sector. For this reason, the tax regime of the mining legislation being declarative, the State must have a more efficient system of audit and control that allows it to verify the veracity or the basis of the decisions of its private partners « , consider SARW analysts.

Therefore, they conclude, no company should be allowed to shut down if analysis shows that it can easily recover losses, especially since, as in the case of Glencore, it does not produce only cobalt, but also copper whose price is stable on the international market.

Escape from Glencore

All in all, in the circles of mining operators, Glencore’s decision to close the Mutanda mine has very little credibility as long as it reflects a type of recurring behavior that hides a well thought out strategy.

According to SARW, this Swiss company took advantage of the improving market to take advantage of undue and excessive benefits. All the more so because the decline in cobalt prices was partly caused by the overproduction that saw companies, including Glencore, deliberately accumulating cobalt stocks.

« This deliberate storage explains the maintenance of prices down while cobalt keeps its strategic importance growing to power electric vehicles. In other words, it is the operator responsible for the fluctuation in the price of cobalt that complains the strongest until threatening closure of its operations, « said the statement.

As a reminder, the DRC holds 50% of world production of Cobalt, which is extracted from copper. The Mutanda mine produced about 200,000 tonnes of copper and over 27,000 tonnes of cobalt, which is one-fifth of the global supply in 2018.

Emilie MBOYO