By on December 6, 2018

2016 Ford Focus EV Charging Cable in Trunk, Image: © 2016 Jeff Voth/The Truth About Cars

The Democratic Republic of Congo has declared cobalt a “strategic” substance, nearly tripling the royalty rate miners will have to pay on it. According to a governmental decree, miners will now pay 10 percent in royalties to extract the element.

While we’ve previously warned of the likelihood of a global supply shortage elevating the price of batteries, it seems this will occur only after the Congo taxes the crap out of it. This is the second time cobalt has seen a royalty hike since June, when the region increased the previous 2 percent royalty to 3.5 percent.

Besides the looming prospect of a reversal in the falling price of EV batteries, a spike in the price of cobalt is already ruffling some feathers. 

According to Reuters, Congolese Prime Minister Bruno Tshibala signed the decree late last month despite fierce opposition from leading investors. Both Glencore and China Molybdenum have lobbied against mineral tax hikes under a new mining code adopted earlier this year.

As the region is responsible for more than 60 percent of the world’s cobalt production, even minor changes can seriously influence the final cost of batteries. Foreign investors have claimed tax hikes under the new code will hamper further investment and have threatened to challenge some parts of the Congo’s new regulations in arbitration.

While this will no doubt impact the price of electric vehicles, a temporary cobalt surplus has managed to keep prices down through the second half of 2018. This surplus is expected to decline sharply as EV adoption continues and mines begin to scramble to meet demand. Most analysts expect to see cobalt trading at record prices again by 2020 and continue upward from there. The increase in royalties really only serves to accelerate the timeline.

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32 Comments on “Battery Prices Likely Heading for the Ceiling After Congo Raises Royalty Rate...”


  • avatar
    Mike G

    I’m sure this increased revenue will benefit the people of the Congo…er, the Swiss bank accounts of its rulers.

  • avatar
    28-Cars-Later

    I love the EV future where fourth rate dictators control the supply of REs needed for my batteries. So #winning.

    Victoire aux gilets jaunes!

    Vive la France!

  • avatar
    TR4

    Charging what the traffic will bear in order to maximize profits = Business 101

    • 0 avatar
      jalop1991

      “Charging what the traffic will bear in order to maximize profits = Business 101”

      until you piss off the US and we invade your country and imprison you = Politics 101

    • 0 avatar
      jalop1991

      “Charging what the traffic will bear in order to maximize profits = Business 101”

      until you p*ss off the US and we invade your country and imprison you = Politics 101

  • avatar
    ACCvsBig10

    De Beers part duece

    When cobalt became worth more than diamonds

  • avatar
    SCE to AUX

    “Battery Prices Likely Heading for the Ceiling After Congo Raises Royalty Rate”

    Hardly. If battery prices varied only due to the royalty rate on mining, this might be true. But cobalt comprises only about 3% of some EV batteries (Tesla, for now), and a finished battery pack has many other costs which continue to drop – notably: labor, and economies of scale.

    Most finished batteries won’t even see a difference in price.

    Tesla – for one – is working toward eliminating cobalt. So it’s possible this rate increase is merely a last-ditch money grab before the market dries up.

    • 0 avatar
      ToddAtlasF1

      Are we talking about 3% by mass, or 3% by cost? Cobalt is just one of the elements of a battery. We’re also passing peak lithium, which doesn’t seem to reveal itself at a greater rate than consumption, like oil for instance.

      • 0 avatar
        Kendahl

        Every time someone mentions peak something or other, I’m reminded of the 1970s when we were supposed to be running out of everything. It was so bad that one wag advised new college graduates to, “Get yours while there’s still some left.” What actually happened was that higher prices made more difficult extraction financially viable, new extraction methods were invented (e.g. fracking) and engineers developed ways to make do with less of materials in short supply or to replace them entirely.

        • 0 avatar
          ToddAtlasF1

          I was making a joke because the other day I saw someone so ill-informed that they referred to peak oil as if it were an element of reality. The known lithium supply isn’t as substantial as the expected lithium demand, but that is subject to changes in battery technology, extraction technology, and even prospecting technology. I have more respect for technological advancement than is contained within the entire church of carbon taxation.

    • 0 avatar
      jatz

      @SCE to AUX:

      Great post. I’m agnostic on EVs but I enjoy seeing cheap sensationalism being lanced.

    • 0 avatar
      mcs

      Another factor according to a white paper I read is that EV battery makers could start direct sourcing cobalt from miners that could lower costs further.

      The cobalt-free cathodes are HV-Spinel (HVS) cathodes. They’re 75% Mn and 25% Ni. No cobalt. They’re using a spinel structure to coat a layered structure. Some are using orthosilicates to create a new class of polyoxyanion cathode. In simpler terms, this article headline is total BS. Cobalt is going bye-bye very soon.

  • avatar
    jmo2

    Well that’s good news for the owners of America’s first primary cobalt mine.

    https://www.streetwisereports.com/article/2018/05/29/the-only-us-based-primary-cobalt-mine-is-nearing-production.html

  • avatar
    Bimmer

    Time to scavenge junk yards for Chevy Cobalt!

  • avatar
    brandloyalty

    For how long have we been subjected to stories about imminent large price increases for ev batteries due to shortages of exotic materials?

    It has become code for ev haters and global warming deniers. It would be nice if the perpetrators of this bogus journalism f’d off.

    Hey, how are house prices in Cobalt Ontario these days?

    • 0 avatar
      highdesertcat

      Have you checked the prices for regular Lead/Acid batteries recently? An Interstate battery (size 35, 24F, etc) can easily retail for $145, plus core charge.

      And AGM batteries like the H6 or H7 retail well over $300, plus core charge.

      Considering that all of these consist of recycled materials, someone is raking in the dough at the motorists expense.

      Let’s be clear, I’m not talking El Cheapo Wal-Mart car batteries with a life expectancy of 24 months or less. I’m talking long-lasting OEM-quality car batteries with a life expectancy of 3 years or more.

      • 0 avatar
        carguy67

        Interstate batteries suck, and I believe they are made in Meheeko. I got a Deka for my Mustang GT for about $80, and they’re made in Pennsylvania. The Interstate/Motorcraft lasted 2 years, tops, but the Deka is going strong at over 3.

        http://www.eastpennmanufacturing.com/

      • 0 avatar
        vvk

        Interesting. The battery in my E46 lasted 13 years. My E60 is 9 years old on its original battery. $250 for a BMW OE battery doesn’t sound so bad anymore.

        • 0 avatar
          TR4

          Where in your cars are the batteries located? My pet theory is that batteries located in the trunk away from engine heat last about 3X longer than those in the engine compartment.

      • 0 avatar
        WalterRohrl

        “Have you checked the prices for regular Lead/Acid batteries recently? An Interstate battery (size 35, 24F, etc) can easily retail for $145, plus core charge.”

        A size 24F Interstate Battery for a 2015 Toyota Tundra is $85.99 at Costco in El Paso. Looks like the savings would pay for a year’s membership… Core charge is $12 which you get back when you haul the old one back in, i.e. irrelevant, who wouldn’t have a core? That includes a 3-year 100% replacement warranty. Good enough.

        tinyurl.com/yc9kstts

        • 0 avatar
          highdesertcat

          Last size 35 battery I put in the 1989 Camry V6 cost me $145 after all the disposal fees were added. And I didn’t have a core because I had to borrow a live 24F from a friend to run the Camry to the store to buy a battery, after the Camry had been parked for months while we were away.

          The old battery was used to power an alarm system for the house.

          Costco in El Paso is 240 miles roundtrip, offsetting any discount with the cost of gas to get there and back.

  • avatar
    Asdf

    This is not really an issue. Just remove ALL incentives on BEVs, and watch demand for BEVs plummet in an instant, which will cause demand for cobalt to do the same. Problem solved.

  • avatar
    Matt Foley

    “I will motivate you to switch to EVs if it short-dicks every cannibal in the Congo!”

  • avatar
    Sigivald

    Old price: X*1.035 (where X is the “base price” the royalties are on).

    New price: X*1.10.

    An increase of 6.5% on cobalt should not make battery prices “head for the ceiling”.

    The first source I could find (https://qnovo.com/82-the-cost-components-of-a-battery/) suggests that the cobalt used in li-ion cathodes costs $10-15 per kWH before this increase.

    $15 + 6.5% = … just under $16.

    A dollar per kWH.

  • avatar
    HotPotato

    Thank you for doing the math! So the price of a Chevy Bolt goes up $60.

    Sixty dollars, you say? Why, that’s straight through the ceiling, I tell you!

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