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Struggle Over Cobalt Supply Disturbs the Clean Energy Revolution

After a series of deals that ended in 2020, a Chinese government-sponsored mining company acquired one of the world’s richest cobalt mines from an American firm. As a result, the United States failed to safeguard decades of financial and diplomatic investments in the Democratic Republic of Congo, where Chinese companies backed by Beijing now control the world’s largest cobalt supply. The precious metal—of which over two-thirds are sourced by Congo—has been among several essential raw materials needed for manufacturing electric car batteries and smartphones. Access to its limited supply is critical in retiring from combustion-engine vehicles and transitioning the world to sustainable energy. These recent acquisitions in the central African nation highlight shifting politics as a result of the clean energy revolution, with mineral-rich developing countries suddenly playing similar roles to oil-rich nations.

Wealthy countries discovering and exploiting the vast natural resources of impoverished Central African nations follow a colonial-era playbook. During World War II, the United States turned to Congo for uranium which helped construct the bombs dropped on Hiroshima and Nagasaki. In the following decades, the U.S. would continue to spend billions of dollars on protecting its mining interests in the region. Formal U.S. diplomatic ties with the mineral-rich country began when President Eisenhower sent hundreds of millions of dollars in foreign aid, including transport planes and other military equipment. Over the past 20 years, the U.S. obtained political clout by playing critical roles in ensuring peace and stability in eastern Congo and funding to combat the AIDS epidemic. Most recent presidents have assisted the nation economically by launching signature programs in support of the entire African continent, such as the Trump administration’s ‘Prosper Africa,’ which sought to incentivize business deals with African nations. However, American mining presence in Congo is declining as Beijing attempts to generate a reliable supply of valued resources.

Source: NYT

A recent investigation by The New York Times revealed the history of cobalt mine acquisitions in which private American firms essentially surrendered resources to China, undoing the U.S.’s deep-rooted ties to the region. In addition to the acquisition of the Tenke Fungurme mine, which went uninterrupted during the final months of the Obama administration, President Trump also stood idly while the same Chinese mining company, China Molybdenum, purchased an even larger cobalt deposit. The latter, previously owned by American mining firm Freeport-McMoRan, controlled a vast expanse of untouched land in Kistanfu, southern Congo. Now, the Chinese mining conglomerate is racing to retrieve its buried treasure of millions of tons of cobalt to keep up with the world’s urgent race against global warming.

Over the past decade and a half, Chinese banks have financed nearly $200 billion in overseas energy sectors. These loans allow emerging economies access to affordable financing to sustain their growing household and industrial energy demands. While these investments primarily support fossil fuel initiatives such as oil, gas, and coal, the superpower’s growing interest in sustainable energy, such as its pursuit of Congo’s cobalt resources, is part of President Xi Jinping’s disciplined strategy that has given China a vital head start over the United States in the race to dominate the auto industry’s electrification and global economy. China’s broader intentions with Congo’s minerals were established in 2007 when, as part of a $6 billion deal, they secured mining rights to a major cobalt mine in return for myriad infrastructure projects throughout the African country. Since then, restless efforts to dominate the mineral’s stock have led current global cobalt supply chains to be dominated by Chinese firms. Their government-led approach to securing close control over the supply chain starkly contrasts with the United States’ dependence on private players in the market, which draws more long-term uncertainty.

Cobalt, used for millennia to make rich blue pigment for ceramics, now serves as an essential component of lithium-ion batteries due to its ability to conduct heat. After realizing its value for smartphones, jet engines, and other military applications, the U.S. government deemed it a commodity of “strategic and critical” importance to national security in 2018. Recently, the precious mineral has taken centre stage as major automakers race to battle climate change by transitioning from combustion engines to battery-powered vehicles. Innovative car brands such as Tesla combined with legacy automakers’ record investments in battery technology led global electric vehicle (EV) sales to rise 43% in 2020. Future EV adoption is expected to rise as governments set deadlines for eliminating the sales of fossil fuel vehicles. Already, favourable government policies and bullish public opinions have led some auto manufacturers, such as Volvo, to pledge an entire shift towards EV sales by the mid-2030s.

Source: Pocket-lint

Consequently, growing demand for cobalt will become the norm as the world shifts to a greater reliance on electric vehicles on the path to accelerating renewable energy. According to the chief executive of an Australian mining firm, the single constraining factor on EV adoption lies in its need for raw materials. Supply constraints and the limited availability of cobalt we experience today could hinder U.S. car manufacturers’ optimistic development plans over the next 10 to 15 years.

Following recent developments and pledges from the COP26 climate summit in November of 2021, it is evident that the global economy must rapidly decrease aggregate greenhouse emissions. Electrification of the car and truck industries—which currently account for one-fifth of total greenhouse gas emissions in the United States—guides significant progress towards a sustainable future. The transformation is also critical to fulfilling the ambitious goal of the 2016 Paris Agreement, which aims to prevent the world’s average temperature from rising by more than 1.5°C compared to pre-industrial levels.

To succeed in its clean energy objectives, the United States must make rapid progress to counter China’s growing dominance of cobalt supply. Fortunately, the continental U.S. also holds cobalt reserves, and recent policy launched a mapping initiative to locate certain minerals and metal and allows faster permitting of mining on federal lands. These efforts led to the construction of a cobalt mine in the state of Idaho which is projected to open in mid-2022. However, domestic mining falls short in securing reliable supply chains, which complicates President Biden’s ambition to make electric vehicles a central pillar of his climate agenda. Other policy approaches include strategic mining collaborations with mineral-rich allies as Australia and Canada, in addition to recycling and reusing prior-used cobalt. Ultimately, the development of less cobalt-intense or cobalt-free batteries is imperative. While Tesla has experimented with and embraced cobalt-free batteries due to their far cheaper cost, the alternatives carry various trade-offs, with the main downside being lower driving ranges—a main argument for combustion engine owners not to switch to EVs.

As the world pivots to a future centred around electric vehicles, the United States is playing catch-up. Given the constraints of unreliable access to cobalt in the future, the U.S. government needs to revitalize efforts in managing a strategic position to lead the revolution to clean energy and provide a counterweight to China’s energy investments around the globe. So far, China’s state-directed industrial policy has outmaneuvered America’s short-sighted, laissez-faire approach to ensuring access around the world to a metal that’s growing in strategic importance around the globe.


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