DRC Cobalt Export Policy — Bans, Taxes, and State Control

The 2018 Mining Code Overhaul

The Democratic Republic of Congo's 2018 revision of its Mining Code marked a watershed in the country's approach to managing its extraordinary mineral wealth. The original 2002 Mining Code had been drafted during a period of post-conflict reconstruction when the DRC's primary objective was attracting foreign investment to restart mining operations devastated by years of war. That code offered generous fiscal terms — low royalties, extensive tax holidays, stability clauses guaranteeing fiscal conditions for up to 25 years — designed to make the DRC competitive with established mining jurisdictions. The strategy succeeded in attracting capital, and copper and cobalt production expanded dramatically through the 2000s and 2010s.

By 2015, however, the political and economic calculus had shifted. The DRC had become the world's dominant cobalt producer and a top-five copper producer, yet the fiscal benefits flowing to the state were widely perceived as inadequate relative to the value being extracted. Chinese companies had acquired controlling interests in many of the country's most productive mines, and the profits from DRC mining operations were largely repatriated to Beijing, Zug, London, and Toronto rather than invested in Congolese infrastructure, education, or healthcare. The government of President Joseph Kabila, facing both domestic pressure and the example of resource nationalism elsewhere in Africa, initiated a comprehensive revision.

The 2018 Mining Code, enacted over the vocal opposition of the international mining industry, made several fundamental changes. It increased royalty rates for most minerals, with cobalt seeing particularly sharp increases. It introduced a super-profits tax triggered when commodity prices exceed specified thresholds. It created the category of "strategic minerals" subject to enhanced state control. It reduced the stability clause period from 25 years to 10, and eliminated the stabilisation of fiscal terms entirely for strategic minerals. And it strengthened the state's right to increase its equity participation in mining operations.

The mining industry's response was fierce. Glencore, Ivanhoe Mines, Randgold Resources, and other major operators lobbied aggressively against the new code, arguing that it would deter investment and make DRC mining operations uncompetitive relative to projects in Zambia, Chile, Peru, and Australia. Some companies invoked the stability clauses in their existing agreements, asserting that the 2002 code's fiscal terms would continue to apply regardless of the new legislation. This triggered protracted legal disputes, several of which remain unresolved.

Strategic Mineral Classification

The most consequential innovation of the 2018 Mining Code was the introduction of the "strategic mineral" category. The code empowers the government to designate any mineral as strategic if it is deemed essential to the national economy, to national security, or to the development of a strategic industrial sector. Minerals so designated are subject to an elevated royalty rate of 10 percent (compared to 3.5 percent for standard minerals), are excluded from fiscal stability guarantees, and are subject to additional state oversight including potential export restrictions.

Cobalt was designated as a strategic mineral in March 2018, immediately upon the code's passage. The designation reflected both cobalt's economic importance — it generates billions of dollars in annual export revenue and accounts for a substantial share of the DRC's GDP — and its geopolitical significance as the essential battery metal powering the global electric vehicle transition. The government's explicit rationale was that the DRC should capture a larger share of the value generated by a mineral that the world increasingly considers indispensable.

The strategic classification enabled the government to take a series of increasingly assertive actions. In early 2025, President Félix Tshisekedi's government announced a temporary ban on cobalt exports, citing the need to stabilise cobalt prices that had collapsed from nearly $82,000 per tonne in 2022 to below $22,000 per tonne by early 2025. The ban, which was subsequently modified into a quota system limiting monthly export volumes, was modelled in part on OPEC's approach to oil production management — an explicit attempt to use the DRC's dominant market position to influence global prices.

The export restrictions had an immediate market impact. Cobalt prices rallied sharply following the announcement, recovering from approximately $22,000 per tonne to over $48,000 within weeks. The rally validated the government's logic — the DRC produces roughly 74 percent of global cobalt, giving it sufficient market power to move prices through supply management — but also raised concerns among consuming nations about supply security and the reliability of Congolese mineral supply.

Precedent and Escalation Risk

The cobalt export restrictions set a precedent that extends beyond cobalt itself. The government has signalled that other minerals could be designated as strategic and subjected to similar controls. Copper, which generates even more export revenue than cobalt, is a potential candidate for strategic designation, though the government has thus far refrained from applying export restrictions to copper, recognising that copper's broader global supply base limits the DRC's price-setting power. Germanium, tantalum, and tin are also produced in significant quantities in the DRC and could theoretically be designated as strategic.

For mining companies and investors, the strategic mineral framework represents a permanent source of regulatory uncertainty. The government retains discretionary power to designate minerals, impose export restrictions, and adjust fiscal terms without the fiscal stability guarantees that previously provided predictability. This uncertainty increases the risk premium that investors demand for DRC projects and complicates the long-term planning that mining operations, with their multi-decade investment horizons, require.

State Actors — Gécamines and EGC

Two state entities play central roles in the DRC's mineral governance architecture: the Générale des Carrières et des Mines (Gécamines) and the Entreprise Générale du Cobalt (EGC). Understanding their functions, capabilities, and limitations is essential to understanding how the DRC's cobalt policy operates in practice.

Gécamines: The State Mining Company

Gécamines, the DRC's state mining company, was once among the world's largest copper-cobalt producers, reaching peak production of approximately 500,000 tonnes of copper per year in the 1980s. Decades of mismanagement, conflict, asset stripping, and underinvestment reduced Gécamines to a shell of its former self, with negligible direct production by the early 2000s. The company's primary economic function shifted from mining to rent collection: Gécamines holds minority equity stakes (typically 5 to 20 percent) in virtually every major mining joint venture in the DRC, entitling it to dividend payments and royalty streams without bearing operational costs.

Gécamines' joint venture portfolio includes stakes in Tenke-Fungurume (with CMOC), Kamoto KCC (with Glencore), Sicomines (with Chinese state-owned enterprises), and numerous smaller operations. These stakes generate substantial revenue for Gécamines, though the proportion of this revenue that reaches the national treasury versus being consumed by the company's own overhead, executive compensation, and opaque expenditures has been a persistent source of controversy. Investigations by international transparency organizations have documented hundreds of millions of dollars in Gécamines revenue that cannot be accounted for through public records.

Under the 2018 Mining Code, the state has the right to increase Gécamines' equity participation in mining ventures when contracts are renewed or when new mining rights are granted. This provision gives the DRC government a mechanism to progressively increase state ownership of the mining sector, a process that mining companies view as creeping expropriation and the government frames as legitimate assertion of resource sovereignty.

EGC: The Artisanal Cobalt Monopoly

The Entreprise Générale du Cobalt, established in 2019, represents the DRC's most ambitious and controversial intervention in the cobalt supply chain. EGC was created as a state-owned monopoly with the exclusive right to purchase and market all cobalt produced by artisanal and small-scale miners (ASM) in the DRC. The rationale was multifaceted: to formalise the artisanal cobalt sector, to improve traceability and address concerns about child labour, to capture a larger share of value for the state, and to reduce the market power of Chinese trading intermediaries — particularly Huayou Cobalt's subsidiary Congo Dongfang Mining — that had historically dominated artisanal cobalt purchasing.

Artisanal mining accounts for an estimated 15 to 30 percent of total DRC cobalt production, depending on price conditions. When cobalt prices are high, artisanal production expands rapidly as tens of thousands of miners dig by hand in concession areas, often under dangerous conditions. When prices fall, artisanal production contracts as miners shift to other activities or other minerals. The artisanal sector is also the primary source of child labour concerns in the cobalt supply chain, with international investigations documenting children as young as seven working in artisanal cobalt mines.

EGC's monopoly was intended to address these issues by creating a single, regulated purchasing channel through which all artisanal cobalt would flow. In practice, EGC's implementation has been uneven. The company signed a major offtake agreement with Trafigura, the Swiss commodity trader, to market artisanal cobalt internationally. However, EGC has struggled with logistics, working capital, and the sheer complexity of establishing purchasing points across the vast and often roadless areas where artisanal mining occurs. Many artisanal miners and local traders continue to sell cobalt outside official EGC channels, either to Chinese buyers or through informal cross-border networks.

International battery manufacturers and automakers have responded to the EGC system with caution. While the formalisation objective is widely supported, concerns persist about whether EGC can actually ensure that its cobalt is free from child labour and other human rights abuses. Some downstream companies have elected to avoid DRC artisanal cobalt entirely, sourcing only from industrial operations with established audit trails. This avoidance, while understandable from a risk management perspective, has the perverse effect of reducing the economic incentive for ASM formalisation and pushing artisanal cobalt into less transparent channels.

The Tax Regime — Royalties, Super-Profits, and Revenue Capture

The fiscal framework governing DRC cobalt production has been fundamentally restructured by the 2018 Mining Code and subsequent regulations. The cumulative effect of these changes is a tax regime that is among the most demanding in the global mining industry — a reflection of both the DRC's resource nationalism and its government's assessment of its own bargaining power as the world's dominant cobalt supplier.

Royalty Rates

The 2018 code increased the royalty rate on cobalt from 2 percent to 3.5 percent for standard minerals, and to 10 percent for minerals designated as strategic. Cobalt's strategic designation means that mining companies pay a 10 percent royalty on the gross revenue from cobalt sales — a rate that is among the highest in the global mining industry and significantly above the 2 to 5 percent range typical of major mining jurisdictions. The royalty is calculated on gross revenue rather than profit, meaning it is payable regardless of whether the mine is profitable in a given period. This structure ensures revenue flow to the state even during periods of low commodity prices but also increases the financial burden on mining companies during downturns.

Super-Profits Tax

The 2018 code introduced a super-profits tax of 50 percent on profits exceeding 25 percent of the cumulative project capital expenditure. This tax is designed to capture windfall gains when commodity prices surge, ensuring that the state benefits from price booms rather than watching excess profits flow entirely to foreign shareholders. The super-profits tax was triggered during the 2021-2022 cobalt price spike, when cobalt prices exceeded $80,000 per tonne and some DRC operations reported extraordinary margins.

Mining companies have contested both the legal basis and the calculation methodology of the super-profits tax. Disputes centre on the definition of qualifying capital expenditure, the treatment of prior-year losses, and the interaction between the super-profits tax and the standard 30 percent corporate income tax. Several companies have initiated arbitration proceedings, and the practical enforcement of the super-profits tax has been inconsistent.

Other Fiscal Instruments

Beyond royalties and the super-profits tax, the DRC's fiscal regime includes a standard corporate income tax of 30 percent (reduced from 35 percent in some circumstances), a 10 percent withholding tax on dividends, customs duties on imported equipment (with some exemptions during the construction phase), and various provincial and local taxes that add to the cumulative fiscal burden. The introduction of a 1 percent tax on the transfer of mining rights and a requirement to repatriate 60 percent of export earnings through Congolese banks further increase the cost of operating in the DRC.

The cumulative effect of these fiscal instruments is a marginal tax rate that can approach 60 to 70 percent of pre-tax profits during periods of high commodity prices. This is significantly above the global average for copper-cobalt mining jurisdictions, and companies frequently cite the DRC's tax burden as a deterrent to new investment. However, the DRC's geological endowment — the highest-grade cobalt deposits on Earth, with among the lowest direct mining costs — means that even after the elevated tax take, DRC operations can be among the most profitable in the industry when prices are favourable.

Revenue Transparency Challenges

A persistent challenge with the DRC's mining fiscal regime is the gap between revenue collection and public benefit. Despite collecting billions of dollars in mining taxes and royalties annually, the DRC remains one of the world's least developed countries, with vast infrastructure deficits, inadequate public services, and poverty rates that have barely improved over the past two decades. International transparency organisations, including the Extractive Industries Transparency Initiative (EITI) and Global Witness, have documented significant discrepancies between the taxes that mining companies report paying and the revenues that appear in the national budget. The leakage occurs at multiple points: Gécamines' opaque finances, provincial government revenue management, intermediary payments to politically connected individuals, and the general weakness of the DRC's public financial management systems.

Impact on Mining Companies and the Corridor

The DRC's cobalt export policy, tax regime, and state intervention framework have far-reaching consequences for every mining company operating in the country and for the viability of the Lobito Corridor as a mineral supply chain.

Company-Specific Impacts

Glencore, the DRC's largest Western-aligned cobalt producer, has absorbed the increased royalties and taxes while maintaining operations at Mutanda and Kamoto (KCC). However, Glencore temporarily placed Mutanda on care and maintenance in 2019-2020, citing — among other factors — the elevated fiscal burden as contributing to the mine's marginal economics at then-prevailing cobalt prices. Mutanda's restart was influenced by both recovering prices and strategic considerations related to Glencore's long-term cobalt supply agreements with Western automakers.

CMOC Group, the Chinese operator of Tenke-Fungurume and Kisanfu, has engaged in a prolonged dispute with Gécamines and the DRC government over royalty payments, tax assessments, and the terms of its operating agreements. The dispute has periodically resulted in the suspension of cobalt exports from Tenke-Fungurume and has generated considerable uncertainty about the stability of even the largest mining operations in the DRC.

Ivanhoe Mines, which operates the Kamoa-Kakula copper complex in a joint venture with Zijin Mining and the DRC state, has navigated the fiscal environment by maintaining close relationships with the government and emphasising its infrastructure contributions to local communities. Kamoa-Kakula is primarily a copper producer, which partially insulates it from cobalt-specific policy interventions, but the broader regulatory uncertainty affects all mining operations regardless of their specific commodity focus.

Investment Deterrence

The cumulative effect of the 2018 Mining Code, the strategic mineral designation, the export restrictions, and the super-profits tax has been to increase the perceived risk of investing in DRC mining. The Fraser Institute's Annual Survey of Mining Companies, which ranks mining jurisdictions by policy attractiveness, has consistently placed the DRC near the bottom of its rankings, reflecting industry dissatisfaction with fiscal instability, regulatory unpredictability, and governance concerns. While the DRC's geological endowment continues to attract investment — geology ultimately determines where mines can be built — the policy environment means that capital flows more slowly and at higher required rates of return than would be the case in a more predictable regulatory framework.

Corridor Implications

For the Lobito Corridor, the DRC's cobalt export policies create both challenges and opportunities. Export restrictions reduce the volume of cobalt available for corridor transport, directly affecting the revenue base of the Lobito Atlantic Railway and the port operations at Lobito. If restrictions become permanent or are extended to other minerals, the corridor's financial viability could be compromised.

Conversely, the DRC's emphasis on domestic value addition creates an opportunity for corridor-based processing. If the government's policy objective is to process cobalt within the DRC rather than export raw material, the corridor could serve as the logistics backbone for a processing industry located in the Copperbelt or at intermediate points along the rail route. Cobalt hydroxide processed into battery-grade cobalt sulfate within the corridor would represent a higher-value export commodity, potentially generating more freight revenue per tonne than raw material.

The corridor's strategic positioning as a Western-aligned supply chain also gives the DRC leverage in negotiations with both Chinese and Western partners. By offering preferential access to corridor logistics for companies that comply with the DRC's value addition and governance requirements, the government can use the corridor as an instrument of industrial policy. This alignment of corridor infrastructure with national mineral policy represents the most promising pathway for ensuring that the DRC's cobalt wealth generates lasting economic benefit rather than merely enriching foreign mining companies and their shareholders.

Information in this article reflects publicly available legislation, regulatory announcements, company disclosures, and reporting by the Extractive Industries Transparency Initiative. Fiscal calculations are illustrative and should not be relied upon for tax planning purposes. This content is for informational purposes only and does not constitute legal or investment advice.