Mining giant China Molybdenum Company (CMOC) has announced a US$2.51 billion plan to double copper and cobalt production at its massive Tenke Fungurume mine in the Democratic Republic of the Congo.
It came on the back of a US$550 million deal in December for CMOC to buy US miner Freeport-McMoRan’s indirect 95 per cent stake in the Kisanfu copper-cobalt operation – also in the DRC.
Other Chinese firms like Huayou Cobalt, Chengtun Mining, and state-owned China Nonferrous Metal Mining Group, own substantial stakes of copper and cobalt reserves in the DRC.
The DRC is the world’s largest producer of cobalt, which is an essential component of batteries for electric vehicles, as well as smartphones, tablets and laptops.
The country has become the epicentre of Chinese investments in Africa, thanks to a surge in global demand for electric vehicle batteries and a general increase in metal prices.
The investments are part of China’s drive to realise its economic and technological ambitions but they are also rattling Washington, with worries that China’s stranglehold on rare minerals and other critical metals could result in supply chain disruptions, analysts say.
From the DRC to Zambia, Zimbabwe, Ghana, Guinea and Ethiopia, Chinese companies are pumping billions of dollars into minerals extraction to feed into Chinese industries for the manufacture of batteries for electric cars, military weapons and making machinery and other electronics.
In the past two decades, the mining industry in Africa ranked third in attracting Chinese loans; the two top being transport and power. Between 2000 and 2019, China advanced 12 loans worth US$18.4 billion into African mining operations, with most of the money going to Angola (US$17.6 billion), especially into its crude oil, according to data by the China Africa Research Initiative and Boston University Global Development Policy Centre.
But analysts forecast the DRC and other mineral-rich countries are the next favoured destinations for Chinese money, saying China is still growing and needs access to more resources in the easiest way possible.
But there is concern about China’s grip on these resources.
A senior fellow at the Atlantic Council think tank last month told the US Senate foreign relations subcommittee on Africa and global health policy that the lithium battery value chain was one area to worry about.
Aubrey Hruby said most of the primary resources for the batteries were in Africa but China dominated the supply chain. And ensuring US competitiveness in electric vehicles and the future green economy would require a rethinking of existing supply chains, she said.
“To move these supply chains away from China and towards the US and [European Union], we need to create a triangle value chain that incorporates African value addition to these vital natural resources,” Hruby told the committee.
Jacqueline Musiitwa, a Johannesburg-based international lawyer, who also chairs the energy and natural resources committee of the New York State Bar Association, said as the movement towards net-zero carbon emissions crystalised, the need for more batteries and critical minerals increased.
She says the US was making a concerted effort to invest in the domestic critical mineral supply chain.
“Covid-19 has taught the world many things, but a relevant one to highlight is that supply chain dependence is too risky. The rising cost of cars and other electronics will hopefully get other countries to move faster,” she said.
Musiitwa says that as Africa attracted Chinese investment in mining, the continent should demand more from foreign investors on environmental standards, carbon emissions and the building of green infrastructure.
