Most of the world�s
cobalt is mined in Africa and the majority of Africa�s cobalt comes from the
Democratic Republic of Congo. The DRC represented about 55 percent of global
mine supply in 2012 and the country contains almost 50 percent of known
worldwide cobalt reserves.
The DRC wants miners to process all their mined ore in the country to
encourage more value-added production. On April 5th 2013, the government gave
companies 90 days to clear stocks and halt exports of unrefined copper and
cobalt - export streams are to be switched from ores and concentrates to
refined products.
"It (the export ban � editor) will be fully enforced by July or
August in order to allow mining operators to re-adjust themselves. The
government is fully aware that mining operators have electricity
problems." DRC Mines Minister Martin Kabwelulu speaking to
Reuters
The DRC has tried to impose such an export ban twice (in 2007 and again in
2010), imposition failed on both counts because of a lack of power in the
country � the DRC suffers from acute electricity shortages despite a vast
network of rivers.
Existing hydro plants, Inga I and Inga II, only produce about a quarter of
their joint capacity of 1,700 MW because of low Congo River water levels and
poor maintenance. Inga 3 wasn�t built because of concerns over the business
climate in Congo. If the first phase, called Inga 3 Low Head does get built,
South Africa will receive just over 50 percent of planned power output. The
government actually expects power shortages to worsen in the coming years and
that by 2020/21 there will be a power shortage of some 5,000 MW.
SFP Metals (UK) Limited, Cobalt
Metal Production
The country�s frequent brownouts and blackouts, and an expected increase
in electricity shortages, do not bode well for an increase in refining
capacity. Already less than 10 per cent of the DRC�s 70 million people have
access to power, and mining companies are scaling back production and
expansion plans because of power shortages.
The news of the DRC�s impending export ban comes as the country is
reviewing its mining code � the government is going to overhaul mining laws
with an eye to boosting state revenues by increasing tax rates and raising
the government's minimum automatic stake in mining projects, proposals
include:
- Enlarge governments
stake from five percent to 35 percent in projects, the 35 percent would
be "free and non dilutable"
- Increase royalties to
gain greater state revenues from the sector
- Introduce a 50 percent
levy, a windfall-profit tax, on miners' "super profits" - when
a commodity's price rises over 25 percent compared with its level at the
time of the project's feasibility study
- Scale back the length
of exploration permits to three years, from the four and five year
permits available under the current code
- Exploitation phase of
mining licenses to be reduced to 25 years from 30 years
- Companies be required
to sign written commitments to protect the environment and help local
communities
- Pay a capital-gains
tax in the event of a takeover
- Projects, after
production start, may no longer benefit from preferential customs rates
on imports destined for use in mining
According to an Internal Displacement Monitoring Centre (IDMC) report from
May 2013. �There were more highly violent conflicts in Africa in 2012
than at any time since 1945."
The Democratic Republic of the Congo (DRC) - previously known as Zaire -
is no exception to the violence flaring in many parts of Africa.
According to IDMC�s report, armed conflict in the eastern part of the
Congo intensified "dramatically" during 2012. The increase in
fighting drove up the number of displaced people to record levels - there are
more than 2.6 million internally displaced people (IDPs) in the country.
Traditionally the DRC�s North and South Kivu regions have been the main
areas of extreme turbulence over the past decades. The mineral resources
contained in these provinces have provided a steady source of wealth/funding
for the various factions claiming its mines.
The hugely mineral rich copper belt region of the DRC, the Congo�s Katanga
Province, has also been producing industrial metals such as copper and cobalt
for decades, historically the region has been very quiet and not been caught
up in the vicious conflicts in Congo�s North and South Kivu.
Unfortunately conditions have deteriorated sharply in the eastern
provinces, including Katanga. Very recently, hundreds of insurgents belonging
to the Mai Mai Kata Katanga (�cut out Katanga� in Swahili) militia - one of
several local militias operating in the province - clashed with security
forces in the streets of Katanga�s capital city Lubumbashi. According to the
United Nations at least 35 people were killed. The attack was the largest in
the province of Katanga in more than a decade. The transport of minerals was
interrupted and authorities imposed a nighttime curfew in Lubumbashi.
The DRC holds two major distinctions:
- It is the richest
country in the world in terms of mineral wealth, at an estimated $24
trillion.
- It is the country in
which the highest number of people - estimates go as high as ten million
- have died due to war since World War II.
Cobalt is a strategic and critical metal used in many diverse industrial
and military applications.
SFP Metals (UK) Limited,
Cobalt Metal Consumption
The growing political risk and socio-economic dissension within the DRC
are creating mounting concern for the security of cobalt�s global supply
chain.
�The Democratic Republic of Congo faces what is probably the most
daunting infrastructure challenge on the African continent�. World Bank
report on DRC Infrastructure
Jim Rogers is well known as �The Commodities King�, he co-founded the
legendary Quantum Fund with George Soros and authored two highly respected
investing books - Investment Biker & Adventure Capitalist.
Mr. Rogers is very bullish on investing in Russia having been quoted in
numerous publications as saying Russia�s leader, president Vladimir Putin,
wants to shake his thug KGB image and Russia stacks up as a good contrarian
play.
Well I�m not in the habit of investing on anybody�s say so. I do my own
due diligence, make my own decisions and take full responsibility for being
right AND wrong.
BUT
I have to agree with Mr. Rogers in that I believe Russia has at least one
good investment, one for strategic and critical metals (including cobalt)
hungry resource junior investors.
The company�s name is Global Cobalt Corp. TSX.V: GCO and it has recently
started trading after a considerable halt, amazing project acquisitions, and
a name change from Puget Ventures.
Global Cobalt is going to fast-track development of its world-class
Karakul Cobalt Project in the Altai Republic of Russia�s southern Siberia.
Having historic Soviet C1+C2 resources estimated at 14.98 million
tonnes of 0.28% cobalt equivalent Co eq. (0.21% cobalt Co; 0.09% bismuth Bi,
0.44% copper Cu and 0.11% tungsten WO2) with additional P1 resources of 46 million
tonnes containing 82,800 tonnes of cobalt - all non NI 43-101 compliant
- the Karakul Project has the potential of being the largest known primary
cobalt asset outside of Africa.
Global Cobalt also plans to bring on stream a solid pipeline of other strategic
and critical metal projects creating a mining district with enormous
potential.
Four additional assets, collectively known as the Altai Sister Properties
(cobalt-tungsten), have been optioned for acquisition by Global Cobalt. The
proximity of the Sister properties to the Karakul Cobalt Deposit adds the
possibility of an extension to the main ore bodies providing significant
upside to the creation of a new mining jurisdiction in Altai.
Conclusion
Global Cobalt Corp., with its highly qualified management team has the
exploration, development and production expertise to enable timely, skilled
development of their impressive asset portfolio.
Global Cobalt is the first mover into a new mining
region, the mineral rich, pro-mining Altai Republic of Russia�s southern
Siberia. GCO is the pioneer, the first foreign, investable, publicly traded
mining company to advance the mineral resources in the entire region.
And that�s the investment opportunity, investors get to position
themselves at the forefront of a move into an immense, resource rich untapped
region, much like what happened with early movers into Mongolia and
Kazakhstan.
Global Cobalt Corp. TSX.V: GCO should be on all our radar screens. It�s
definitely on mine, is it on yours?
If not, it should be.
rick@aheadoftheherd.com
www.aheadoftheherd.com
Richard is the owner of Aheadoftheherd.com and invests in the junior
resource/bio-tech sectors. His articles have been published on over 400
websites, including:
WallStreetJournal, USAToday, NationalPost, Lewrockwell,
MontrealGazette, VancouverSun, CBSnews, HuffingtonPost, Londonthenews,
Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire,
Indiatimes, ninemsn, ibtimes, businessweek.com and the Association of Mining
Analysts.
If you're interested in learning more about the junior resource and
bio-med sectors, and quality individual company�s within these sectors,
please come and visit us at www.aheadoftheherd.com
***
Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell
or the solicitation of an offer to purchase or subscribe for any investment.
Richard Mills has based this document on information obtained from
sources he believes to be reliable but which has not been independently
verified.
Richard Mills makes no guarantee, representation or warranty and
accepts no responsibility or liability as to its accuracy or completeness.
Expressions of opinion are those of Richard Mills only and are subject to
change without notice. Richard Mills assumes no warranty, liability or
guarantee for the current relevance, correctness or completeness of any information
provided within this Report and will not be held liable for the consequence
of reliance upon any opinion or statement contained herein or any omission.
Furthermore, I, Richard Mills, assume no liability for any direct or
indirect loss or damage or, in particular, for lost profit, which you may
incur as a result of the use and existence of the information provided within
this Report.
Richard does not own shares of Global Cobalt Corp. TSX.V: GCO
Global Cobalt is a paid advertiser
on Richard�s site, aheadoftheherd.com
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