(Ecofin Agency) - The Democratic Republic of Congo (DRC) is the world's top cobalt producer and the second-largest producer of copper. Both minerals are essential for energy transition. However, concerns remain about how much profit the country effectively makes from its mineral reserves.

Kamoto Mine (KCC), a firm owned by Glencore, is at the center of a dispute with the tax authorities of the Democratic Republic of Congo (DRC). In H1 2024, KCC reported outputs of 88,000 tonnes of copper and 11,700 tonnes of cobalt. The DRC's Direction générale des recettes administratives, judiciaires, domaniales et de participations (DGRAD) is claiming $895 million in unpaid royalties from Glencore. 

While production is currently unaffected, any changes could widen the gap between Glencore and China's CMOC, which became the world's top cobalt producer in 2023.

Although there has been no official statement regarding the dispute, reports indicate that DGRAD has taken steps to compel Glencore to pay royalties. These actions include freezing bank accounts and temporarily closing a warehouse owned by Glencore's subsidiary.

This information comes shortly after Glencore released its activity report for the first half of 2024. According to Bankable's analysis, KCC remains Glencore's largest copper and cobalt mine in the DRC, accounting for 88% of copper and 81% of cobalt produced by the company in the country in H1 2024.

For fiscal 2024, Glencore expects to produce between 35,000 and 40,000 tonnes of cobalt, down from 41,500 tonnes in 2023. In contrast, CMOC's cobalt production rose by 174% last year to 55,526 tonnes.

If confirmed, the dispute with Glencore would raise further questions about how much profit the DRC earns from its mineral resources. The country is expected to generate an average of $5.5 billion in mining revenue between 2018 and 2022, compared to $4 billion from 2013 to 2017, according to the International Monetary Fund (IMF). This increase is attributed to factors like a new mining code that raised royalties and taxes, as well as higher production and prices for copper and cobalt.

Glencore claims that KCC paid $2.3 billion in taxes and royalties in the DRC between 2021 and 2023.

Louis-Nino Kansoun