Thanks to the Democratic Republic of the Congo.
The price of your next electric vehicle could go up significantly in the near future, and it's all thanks to the Democratic Republic of the Congo.
The African country is the world's largest producer of cobalt – a rare-earth material that's essential to the production of the batteries used in most electric vehicles. And its prime minister has just enacted a new measure that will nearly triple the royalty that miners will have to pay to the government to pull cobalt from the earth – from 3.5 percent of its value to 10. This after the rate was already hiked just this past June from two percent.
Along with cobalt, the Congolese government also deemed coltan and germaninum – used for producing electronic devices and transistors, respectively – as “strategic” materials, paving the way for their increased royalty rates as well. But the mining and energy companies aren't about to take the unilateral rate-hike lying down.
According to Automotive News, leading investors Glencore and China Molybdenum have indicated that they may, having significantly invested in the resource and its extraction, enter legal arbitration with the government.
Though cobalt prices rose significantly in the past couple of years on the growth in demand for the electric (or electrified) vehicles that use them, a surplus in supply has seen cobalt's prices drop by 40 percent in recent months.
The Congolese government's actions could force investors to look elsewhere to countries with smaller cobalt deposits should the rate-hike remain in effect. But it could also prompt battery producers – like Tesla, for example – to further seek alternatives to the use of rare-earth metals.