Sources say that Congo will tie export quotas for cobalt to data from three-year companies.
Three sources with knowledge of the issue said that the Democratic Republic of Congo would allocate cobalt export quotas annually based on the production and shipment statistics of companies for the past three years. This is a major shift in policy intended to limit the supply of the world's largest producer.
The new quota system is set to come into effect on 16 October. It replaces the months-long suspension of exports that caused supply chain disruptions and roiled electric vehicle manufacturers in China, a major consumer.
Congo is responsible for 70% of the global cobalt production, so its regulatory decisions are crucial to the battery, smartphone and defence system metals markets.
Previous reports stated that Congo will permanently ban cobalt-exporters who violate the new quota systems. Felix Tshisekedi, President of the Republic of Congo, said that the export freeze had helped to drive a 92% increase in cobalt price since March. He called the new system "a real lever to influence this strategically important market".
GLENCORE SUPPORTS QUOTA SYSTEM; CMOC OPPOSES TO IT
Glencore, which is the second largest cobalt producer in the world, supports a quota-based system. CMOC on the other hand, the number one producer, is against it.
Cobalt prices at Comex are now $19 per lb, or $41,890 for a ton. This is a 90% increase since the price of $10 alb was announced in February.
The first source said that a government committee was reviewing historical data to determine eligibility and quotas.
Sources said that the framework would exclude small-scale miners and not implement a licensing system for large producers.
Sources say that authorities will instead strengthen controls in laboratories and at cobalt loading stations to ensure traceability, and to prevent fraud.
A second source confirmed that smaller producers would still need to apply for additional licenses and export permits.
A multi-agency panel, which includes representatives of the mining ministry, the presidency and chambers of mines is developing the quota system with the goal of aligning it with national policy and improving transparency.
The preparations to implement the quotas system coincide with the intensification of conflict in the mineral-rich east of Congo. Fighting between the M23 rebels, and the army, has resulted in the deaths of thousands and displacement of hundreds of thousands.
The U.S.-backed Peace effort suffered a setback after Congo and Rwanda failed sign an agreement known as Regional Economic Integration Framework. This accord was part of a plan designed to make the sectors in both countries more attractive to Western Investors. (Writing and editing by Ed Osmond; Maxwell Akalaare Adombila)
(source: Reuters)