As the climate emergency pushes major nations to revise their carbon emissions strategies, a new battle rages over which resources should replace oil. Among them, cobalt, an essential mineral for the production of batteries, at the heart of the race for the electrification of the automotive industry. For now, this competition is largely dominated by China. The Middle Kingdom took advantage of the space opened up by years of American policies favoring thermal vehicles. Today, Washington’s priorities have changed, too late?
the New York Times investigated the struggle between China and the United States over the lands of the Democratic Republic of the Congo to get their hands on the biggest share of the world’s Cobalt resources. At the expense of the locals, of course.
Cobalt: the new black gold
One of the major applications of cobalt today is in the manufacture of rechargeable batteries of all kinds. Cobalt improves the performance of batteries found in smartphones, connected objects or laptops, and plays an important role in electric vehicles. This resource being finite, and the needs of technological industries exploding, the Worldwide Power Company predicts a shortage by 2030, or even 2025 according to more alarmist forecasters.
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For example, a car You’re here long battery life requires about 10 kilos of cobalt, more than 400 times the amount contained in a mobile phone. Manufacturers, such as Ford, are trying to limit the need for newly mined cobalt by turning to recycling and, or by reducing the share of precious ore in favor of other metals. A strategy that has its limits, for the moment it is not possible to completely replace it.
The China, well aware of the stakes, took advantage of the absence of competitors to monopolize a large share of production to the detriment of the United States, too busy promoting vehicles with internal combustion engines. The latter, now betting on the sale of electric vehicles as part of their new environmental policy, want to regain control over the production of cobalt. The domination of the great Chinese rival on this ore could drive prices up and crowd out the production of American electric vehicles in favor of its own.
the New York Times looked at the underside of this battle which takes us to the region of Kisanfu, a forested part of the south-east of the Democratic Republic of Congo, concealing one of the largest and purest untapped reserves of cobalt in the planet. This African country alone provides more than 70% of Cobalt production in the world.
A Cobalt mine in the Democratic Republic of Congo. Picture: Fairphone/Flickr.
China vs USA
The investigation of the American newspaper was based on a thousand diplomatic documents to which must be added more than a hundred interviews with people spread over three continents.
A pivotal date emerges, 2016. Freeport-McMoRan, an American mining company, sold two massive reserves of cobalt to Chinese conglomerate China Molybdenum that year. This acceleration of the Chinese presence in Congolese mines coincides with the launch, in 2015, of the “Made in China 2025” strategy. An ambitious plan, detailing China’s goals to become a “manufacturing superpower” in ten areas, including batteries for electric cars.
Chinese mining companies have since embarked on a buying spree in the region, locking down much of the global cobalt supply chain. According to New York Times, 15 of the 19 cobalt-producing mines in the Democratic Republic of the Congo are now owned by Chinese companies. They have received at least $12 billion in loans and funding from state-backed institutions. The five largest Chinese companies in Congo, which are largely state-owned, have received at least $124 billion in credits for their international operations.
The United States lagged behind. During his mandate, Donald Trump abolished the environmental standards imposed on car manufacturers, giving China even greater leeway. The arrival of Joe Biden in power has rhymed with new ambitions in favor of the environment in the United States. The new US administration is now negotiating hard with Congress to pass the “Build Back Better” bill, a $1.75 trillion spending program meant to enable America’s triumph in the face of both climate change and competition from China.
Analysts and experts are already warning of the risk of a shortage of batteries for electric vehicles, capable of disrupting supply chains, like the crisis in semiconductors. In the United States, electric vehicle manufacturers like Tesla and traditional brands like General Motors and Ford are preparing to significantly increase their demand for cobalt and lithium in the coming years. General Motors, for example, has announced its intention to completely phase out conventional gasoline and diesel vehicles by 2035. This could put a strain on already fragile reserves.
According to the national energy agency, supplies from existing mines may only cover half of lithium and cobalt needs by 2030. During the visit of a General Motors plant, Joe Biden expressed his desire to step up the pace in the race for minerals with China, ” we risked losing our edge as a nation, and China and the rest of the world are catching up with us. Well, we’re about to turn the tide in a very, very important way. “.
A UBS study published in September 2021 shows that the cobalt market is likely to experience a growing supply shortfall already this year without new mining operations. Source: UBS.
Europe, for its part, has fallen considerably behind in this area even though it is aiming for a ban on the sale of new petrol or diesel cars from 2035. report submitted a few days ago to the French government indicates that Europe will only be able to produce, by 2030, 30% of its strategic mineral needs for electric batteries. ” The European Union is clearly behind China, which has taken a 20-year lead in controlling the entire supply chain of strategic minerals and metals in order to get out of dependence on fossil fuels “Said the industrialist Philippe Varin, ex-CEO of PSA, author of this report.
And in the end it’s the Congo that toasts
The cobalt frenzy has drawn large numbers of opportunistic industrialists to the Democratic Republic of Congo, in part to the detriment of its population. Human disasters must already be taken into account: displaced populations, drastically reduced employer safety, diseases linked to metal emissions into the air, exploitation of children… To which must be added the ecological risks linked to the mining extraction such as water and soil pollution. Finally, has the sale of strategic resources really benefited the African country?
The Congo is not an isolated case. According to the China Africa Research Initiative, Chinese banks have committed more than $153 billion loans to African governments and state-owned enterprises between 2000 and 2019 for the development of their infrastructure. In return, China obtains a large number of mining concessions on the continent. A relationship that tends to wither because of the security, environmental and human risks associated with the Chinese project, not to mention the problems of corruption. Demonstrations were organized against projects funded in Angola, Ghana, Kenya and Gambia.
Taking advantage of this unfavorable context for Beijing, the United States is now interfering in African affairs. As part of their anti-corruption program, Washington is funding the review of Chinese mining contracts in Africa. The Congolese government is in the process of concluding a major review of its mining contracts using US dollars. They verify whether or not Chinese companies fulfill their contractual obligations and respect the commitments made by China as early as 2008.
The agreement was simple: in exchange for the construction of infrastructure such as roads or hospitals for an amount of 6 billion dollars, Congo promised access to 10 million tons of copper and more than 600,000 tons of cobalt. However, China does not seem to have respected its end of the bargain. In August, Congolese President Felix Tshisekedi appointed a commission to investigate allegations that China Molybdenum may have defrauded Congolese authorities of billions of dollars in royalties. The company risks being expelled from the Democratic Republic of Congo.
Given the backwardness of the United States, these maneuvers will probably not be enough to catch up with China. Developed countries still risk having to turn to the Middle Kingdom if they want to decarbonize their economy. With supply unable to keep up with the explosion in demand at the present time, the shortage of semiconductors hitting the automotive industry hard could be quickly followed by a shortage of cobalt. Unless a new substitute is found by then…