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HomeWorld NewsUS-Congo Agreement Can Help Fix African Country’s Corrupted China-Dominated Cobalt Industry: Experts

US-Congo Agreement Can Help Fix African Country’s Corrupted China-Dominated Cobalt Industry: Experts

News Analysis

The United States signed a memorandum of understanding (MoU) with the Democratic Republic of the Congo (DRC) and Zambia late last year. The agreement was intended to facilitate the development of electric vehicle battery supply chains, which involve the mining of critical minerals such as cobalt and copper.

The agreement has raised concerns because cobalt mining in the DRC is currently monopolized by China. Critics worry that the MoU will ultimately benefit China, by focusing the United States on what some see as a less-than-reliable source of materials, rather than developing sources at home.

While both Zambia and the DRC are top producers of the metals, the DRC is the more richly endowed, producing over 70 percent of the world’s cobalt, which is typically mined as a by-product of copper or nickel mines. Experts told The Epoch Times that the MoU (pdf), which was signed on Dec. 13, can help the U.S. secure the supply chain and gradually enable it to replace the corrupt practices cultivated by the Chinese.

The International Energy Agency said in 2021 that amid the energy transition, the development of new supply chains for critical minerals like cobalt will come to “define 21st century energy security” because although the consumption of EV battery-run products is increasing, the production of cobalt continues to be dominated by just a few countries.

If successful, the MoU, which aims “to facilitate the development of an integrated value chain for the production of electric vehicle (EV) batteries in the DRC and Zambia,” could help break China’s grip on mineral supply chains based out of Africa, said Christian Géraud Neema Byamungu in a commentary published by the Center for Strategic and International Studies on March 6.

The State Department said in a release on Jan. 18 that the American private sector can provide technical knowledge and financing for commercial development, while the U.S. government “will work with the DRC and Zambia to ensure the private sector has a level playing field to participate in these projects.”

American Businesses a Qualitative Improvement

J. Peter Pham served as United States special envoy for the Sahel and Great Lakes regions of Africa under President Donald Trump. He told The Epoch Times that U.S. participation will positively impact the DRC.

“More U.S. engagement, especially U.S. businesses which have reputations to protect, will improve the environmental, social, and governance climate,” said Pham. “What has staying out of the DRC for years done but given China the dominant position it has acquired for want of competition?”

Fifteen out of the 19 cobalt operations in the African nation are owned or co-owned by Chinese entities, according to an October, 2022 report in The Diplomat.  The Chinese companies have come under scrutiny for their operations in the DRC.

According to an investigative report by Spanish daily El País, Chinese-owned companies are illegally extracting natural resources in the northern DRC, “using permits that amount to blank checks.”

A few months before the MoU was signed, Secretary of State Anthony Blinken visited the DRC.  The United States welcomed the DRC’s “renewed pledges” to root out “pervasive corruption,” the State Department said in a trip fact sheet.

Long-running, systematic issues with corruption in the DRC can’t be expected to disappear overnight, said Pham. Overcoming these issues will require long-term commitment and vigilance from the Congolese government and international investors.

“That said, however, American businesses would represent a qualitative improvement over mainland Chinese competitors,” said Pham. “Not only are American businesses subject to robust legal obligations under the Foreign Corrupt Practices Act and other U.S. laws, but American businesses are accountable to their shareholders, who are sensitive to reputational concerns, and also operate under different cultural ethos.”

Epoch Times Photo
Artisanal miners working at the Shabara artisanal mine near Kolwezi , DRC, on October 12, 2022. (Junior Kannah/AFP via Getty Images)

Multi-dimensional Challenges

China’s monopoly over cobalt mining in the DRC has raised concerns among industry insiders, human rights activists, and lawmakers.

Melissa Sanderson is a former American senior diplomat who served as Charge d’Affaires in Kinshasa, DRC. Writing in Investor Intel, Sanderson said that the DRC and Zambia can’t be defined as reliable sources. She feels the MoU shows desperation on the part of the U.S. administration to “solve the looming disaster confronting the electric vehicle, green energy, and defense industries” due to a global shortage of materials.

“Caught between dueling national defense and political priorities, the administration continues thrashing about to find reliable sources of the above-mentioned materials without having to actually permit new mines in the U.S.,” said Sanderson.

Critics like Sanderson want to know why the administration is not making efforts to build a domestic supply chain for materials such as cobalt and copper, instead seeming to encourage the opposite.

North America’s Cobalt Reserves

However, Pham said these arguments don’t really apply to cobalt, which is used not only for EV batteries but for a host of other applications, including temperature-resistant alloys for fighter jets and magnets used in stealth technology.

Pham told The Epoch Times that cobalt reserves in the United States are so limited that if mined, they would last less than eight years.

“The simple fact is that God has not blessed America with an abundance of cobalt,” he said. “In contrast, the DRC has as much cobalt as the rest of the world put together. If we are to have sufficient cobalt for our needs, the DRC will have to be part of the supply chain. There is no other way.”

Compared to the DRC’s 3.6 million tons of cobalt reserves, the United States has only 55,000 tons of the metal, according to Mining Digital magazine, while Canada has additional reserves of 230,000 tons.

According to Mining magazine, the silver lining in the North American cobalt supply chain is that the Canadian reserves are of the highest quality—so much so that investors including Bill Gates are funding cobalt exploration in Canada. California-based start-up Kobold Metals, backed by Bill Gates, Jeff Bezos, and other billionaires, is taking a data-driven approach to finding cobalt reserves in Canada, using what it calls “machine prospecting.”

Congo’s Mining Ecosystem

Congo’s mining ecosystem, on the other hand, is huge and operational, although it has never been devoid of problems and controversies.

Cobalt has become a unique commodity because it is controlled by only two countries: China and the DRC, according to Cade Ahlijian, writing on Michigan State University’s Global Edge blog. While the DRC supplies about 70 percent of the world’s cobalt, China finances or owns 80 percent of industrial cobalt mines in the central African country.

If that wasn’t challenging enough for the liberal, democratic economies reliant on this supply chain, mining operations in the DNR are tainted by the widespread use of child labor. According to a Wilson Center report, Congolese mines employ 40,000 children, including some as young as six years of age.

At the root of this problem is artisanal cobalt mining. Up to 200,000 artisanal miners currently work in the DNR, according to a Reuters report. The small-scale cobalt mines, frequently lacking proper protective equipment and with few safety standards, are responsible for 20 percent of the country’s cobalt output, according to the Wilson Center report. 

To address the issue of artisanal and small-scale mining (ASM) Congo launched the state-backed Entreprise Générale du Cobalt (EGC) in March of 2021, to “formalize the ASM cobalt supply chain with a primary focus to preserve and protect respect for human rights, safety, and environmental standards,” according to an EGC release. The company has monopoly rights to all artisanally mined cobalt. EGC will partner with Pact, a Washington headquartered NGO, to “ensure responsible mining standards,” according to the release.

Trouble also exists in the east and north of Congo, due to armed militia groups running rampant, said Sanderson.

Addressing the Challenges

Pham said that the challenges to cobalt mining in the DRC are not insurmountable.

“As for human rights and other concerns, no one claims things are perfect in the Congo (or anywhere else), but if we want cobalt, geology does not give us other realistic choices,” said Pham. The presence of U.S. companies has the potential to raise the policy standards of the industry in Congo, he added.

Immediately after the MoU was signed, KoBold Metals announced an investment of $150 million to explore and develop the Mingomba copper deposit in Zambia (pdf).

Epoch Times Photo
A man watches a conveyor belt loaded with chunks of raw cobalt at a plant in Lubumbashi, DRC, on Feb. 16, 2018. The cobalt would be exported, mainly to China, to be refined. (Samir Tounsi/AFP via Getty Images)

Tackling Chinese Corruption

Experts say Chinese companies used unscrupulous tactics to monopolize the production of cobalt in Congo.

“In many cases, the Chinese companies obtained the mining licenses through corruption and/or have not fulfilled the obligations they committed to–an infamous example being the ‘minerals for infrastructure’ deal that former President Joseph Kabila struck,” said Pham.

The so-called Sicomines Agreement, signed in 2007, was a multibillion-dollar materials for infrastructure deal. It gave Chinese partners mining rights in exchange for the construction of transport and social infrastructure in the DRC, financed by loans from state-owned China Eximbank.

Byamungu said the United States has made political attempts to compel DRC President Felix Tshisekedi to revise previous Congolese deals with China, including the Sicomines agreement. However, ​”so far, the move has not been able to bear tangible results, much to Washington’s dismay,” said Byamungu.

Pham said that when he was acting as U.S. special envoy for the Great Lakes, the government of the DRC had started “investigating these questions” and had also initiated “several disputes” with Chinese companies.

Preventing a Chinese Bottleneck

The issue goes beyond cobalt mining itself, Pham said. “The strategic challenge for the United States is to have secure supply chains–that is, access–to cobalt. And so, at the end of the day, it is less of a concern if Chinese companies dig up the cobalt. The issue is whether China can bottleneck the supply chain and block American access to processed cobalt.”

The intent behind the MoU was to help the DRC and Zambia, which has great quantities of copper, capture the value chain by developing processing there, he said.

“Thus, even if Chinese companies retain the license to mine, the processing of the raw mineral would be done there by some sort of a joint venture of Congolese, Zambian, American, and other stakeholders,” according to Pham.

The end product of this endeavor, if successful, would be the availability of cobalt to all at market prices. China would neither be able to capture the value chain nor have the ability to make cobalt processing a choke point, Pham said.

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