Congo-Kinshasa can imagine Kobalt-Opec

For years, international mining corporations avoided the countries of Congo-Kinshasa and Zambia. This is changing with the global hunger for metals for the energy transition. This also increases the self-confidence of the countries.

Cobalt mining in Congo-Kinshasa is still largely shaped by artisanal miners.

Sebastian Meyer/Corbis/Getty

Cobalt is one of the key metals for the energy transition. The temperature-resistant raw material is mainly used for batteries in electric vehicles or smartphones. Lithium-ion batteries are the previous workhorses of a green revolution in electromobility. Cobalt has another special feature: the mining of the metal is dominated by Congo-Kinshasa. According to the US Geological Survey, around 70 percent of global production in 2021 came from the African country. In addition, Congo-Kinshasa has around half of all reserves.

More dominant than Saudi Arabia

The Congolese government is well aware of the possible leverage it has with this strategic metal. When asked if he could imagine a cobalt OPEC modeled after the oil cartel, Vidiye Tshimanga, a strategic adviser to Congolese President Felix Tshisekedi, said: “We can do something like that.” In an interview at the annual meeting of the Cobalt Institute in Zurich, Tshimanga recalls that OPEC has a share of around a third in the oil market. Congo-Kinshasa is more important on the cobalt market.

From petrostates to electric states

Share of the three largest producing countries in 2019, in %

«We have a right to be a controller of the market. But we need partners for this, especially from Europe,” says Tshimanga. The government in Kinshasa has high hopes for the state-owned company Entreprise Générale du Cobalt (EGC) and the new regulatory authority Arecomms. These organizations aim to solve a problem that is currently hampering the country’s cobalt production. At the same time, the government wants to become an important player in the global market.

accusation of hypocrisy

Cobalt mining in Congo-Kinshasa has been linked to child labour, pollution, corruption and violence. The so-called small-scale mining is particularly affected by these problems. Many Western companies avoid the raw material from the Central African country because it can often not be guaranteed that the supply chain is “harmless”. However, Tshimanga alleges hypocrisy because Congolese cobalt ends up in Chinese refineries that dominate the market. However, the Chinese manufacturers would buy the batteries without restrictions.

At the same time, the mining of ores is the livelihood of many people. The amounts mined by artisanal miners, who often work under dangerous conditions, are massive: More than 10 percent of the world’s supply comes from artisanal mining in Congo-Kinshasa, which according to the government accounts for between 20 and 40 percent of production in the African country. The other amounts of cobalt come from mechanized mines such as those at Glencore. The Swiss raw materials group is one of the largest cobalt producers in Congo-Kinshasa. There are also mining projects with Chinese participation.

Swiss participation

EGC is intended to remedy this issue: The state-owned company, founded in 2019, is intended to be the sole buyer of cobalt from small-scale mining. The idea is that small-scale miners can mine cobalt in a controlled manner in predefined areas. This is to ensure safety standards and exclude child labor. In addition, the origin of the cobalt should be traceable in order to meet the requirements of car and electronics companies. In addition, the small miners should get “fair prices” for the mined cobalt.

EGC could become a major market player – and control the market. Arecomms is responsible for setting standards and enforcing the rules. The commodities trader Trafigura, which operates out of Geneva, has already agreed to cooperate with EGC. In exchange for a loan, Trafigura has acquired the right to market half of the cobalt volumes. However, according to Tshimanga, the government has the final say on who the material is sold to. Apparently, Renault has already expressed an interest in buying cobalt directly in Congo-Kinshasa.

Batteries made in Africa

But the big plans don’t end there: Congo-Kinshasa and Zambia recently signed a cooperation agreement. The idea behind this is to set up an African battery production facility, especially since the raw materials required for this are all available locally. Congo-Kinshasa and Zambia share an area known as the Copper Belt. However, the plans also include nickel from Madagascar and manganese from Gabon.

“The goal is to increase value creation in Africa,” says Paul Kabuswe, Zambia’s mining minister. A pilot project for the production of a preliminary product for lithium-ion batteries is initially planned. Julien Paluku, Congo-Kinshasa’s Industry Minister, refers to a study, which calculated significantly lower capital costs for such a factory in the Central African country than in China or Poland. This market is currently dominated by Chinese suppliers.

“The pilot factory will start production at the end of 2023. After that, we gather experience for the production of batteries,” says Paluku confidently. The project is supported by development banks such as the Africa Export-Import Bank (Afreximbank). The states are also looking for private capital and know-how donors. Companies like Glencore should be included. A representative of the Swiss company said at the annual meeting that the project was being looked at. However, you will not invest alone.

rush in the copper belt

The currently high commodity prices and the gold-rush mood that has arisen because of the energy transition have made Congo-Kinshasa and Zambia attractive again. For years, large international mining companies avoided the two countries or tried to jump off. Even Glencore withdrew from Zambia last year, but the company still has two mines in Congo-Kinshasa.

Now the interest of mining companies like First Quantum, Barrick Gold or Anglo American has increased, especially in Zambia. In large part this can be attributed to new President Hakainde Hichilema, who was elected last year and who has been courting foreign investors while his predecessor stirred up conflict.

«The rush is great. We have to do it right this time,” says Zambian Mines Minister Kabuswe. This also means that the population must benefit from the wealth of raw materials. For the heavily indebted country, the income from the extraction of raw materials is also important in order to be able to repay the foreign claims.

But there are also high-flying plans in Congo-Kinshasa. The project of the dazzling mining veteran Robert Friedland is already well advanced. Its mine in the copper belt is expected to be one of the largest producers of the red metal from 2024. Kabuswe’s appeal at the annual conference applies to the entire region: “Enough talk of potential. We must act now.”

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