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In Congo, China hits obstacles in global cobalt competition

For more than a decade, Chinese companies have spent billions of dollars buying US and European miners in the Cobalt Belt of the Democratic Republic of the Congo. It is the world’s most abundant source of minerals that has become essential to the global transition to cleaner energy. Companies are facing problems after a court has ordered one of the largest mines to temporarily relinquish control of one of its mines.

Depending on the manufacturer, Tesla may require 10 to 30 pounds of cobalt to make a battery with just one electric vehicle. Ltd

Cobalt increases chargeability, provides a stabilizing effect, prolongs battery life and prevents cathode corrosion that can lead to battery fire.

Congo accounted for 70% of the world’s total cobalt production last year, with Chinese investors controlling similar proportions of cobalt production.

Demand is growing rapidly and the United States is afraid to be left behind. Earlier this year, the Biden administration sent a team to the capital, Kinshasa, to meet with Congolese leaders to see how the United States could secure access to silver-gray metal. A US deputy national security adviser criticized what he called an “opaque” Chinese mining contract, saying that generations of investors had used Congolese resources.

Congo itself is seeking a larger part of the market after a court stripped Hong Kong-listed Chinese molybdenum last week, opposed expanding China’s economic footprint in Africa. Ltd

China’s Molybdenum must be on the sidelines for six months after state miner Jecamines SA has accused it of trying to avoid millions of dollars in royalty payments by underreporting reserves.

Molybdenum in China purchased a mine from Freeport-McMoran for $ 2.65 billion Ltd

He offered a settlement in 2016 and said he hoped the problem would be resolved soon, but the process is slow, people familiar with the situation say.

The company did not respond to further comments, but the investigation is now expanding to several other Chinese mining companies.

Standoffs could be a turning point for China’s involvement in the continent, as cobalt prices rise to their highest levels in years. To build roads and other important infrastructure.

Geraud Neema, an analyst and editor of the China Africa Project, a non-profit organization, said:

Last fall, China’s molybdenum seems to believe it is in the more solid ground of Congo, almost doubling its cobalt and copper production at the Tenkefan gourmet site in the vast dry shrublands of Luaraba. We have embarked on a $ 2.51 billion expansion plan. state. The outlook looked good. Cobalt prices were rising as optimism grew over the rapid spread of electric vehicles.

2013 Tenya Fungurume Mine.


Photo:

Reuters Staff / Reuters

However, since December, Jecamines, which owns a 20% stake in the mine, has accused Chinese of underestimating the mine’s reserves and paying less to the Congolese side, dismissing Chinese management. We are promoting. A few years after Congo declared cobalt a strategic mining industry, Congolese authorities are now investigating $ 6 billion in China-funded mining infrastructure transactions.

Some industry analysts are currently questioning the stability of the Congolese industry. Uncertainty could already push prices up after more than doubling since January 2020 as electric car makers are rushing to secure supply.

Alexandre Raymakers, an analyst at risk consulting firm Maplecroft, said: -The primary target for managed assets. “

During a visit to the mining area in the middle of last year, President Felix Tshisekedi of Congo ensured that the Congolese people would benefit from their vast mining industry and ultimately break the so-called resource curse. In, his government vowed to continue reviewing mining contracts. Congo is one of the poorest countries in the world, with an annual budget of about $ 7 billion. According to the World Bank, more than 60% of Congo’s 90 million people live on less than $ 1.90 a day.

“I’m tired of seeing foreigners come here with empty pockets and leave as millionaires while we’re still poor,” he cheers on the city of Kolwezi. I talked to the crowd to raise.

“The issue at the Tenke Fungurume mine goes beyond technical issues,” said Anneke Van Woudenberg, executive director of Rights and Accountability in Development, a UK-based company Watchdog, alleged abuse in the country’s cobalt industry. It is documented.

“New management needs to urgently address the issue of very low wages,” she said.

There is also the problem that Kinshasa can prolong the conflict and damage its reputation among investors. China’s molybdenum and the Congolese government have held talks for several months before the court stripped the mine’s operations from Chinese companies. Executive Sun Ruiwen has met with Tshisekedi for hours at the presidential residence, but there is still a big gap between the two. Some observers have expressed concern with Congolese mining companies that the Chinese side has acquired mining assets under unfair conditions. Congo has recovered from years of conflict — legal.

Congolese President Felix Tshisekedi said his government will continue to review mining contracts so that the Congolese people can benefit from the country’s mining industry.


Photo:

arsene mpiana / Agence France-Presse / Getty Images

Chinese executives assess whether accounting firm Mothers did not declare tens of thousands of tons of copper and cobalt found on the Tenke Fun Gourmet site, and the number of annual payments required from Jecamines when new. A payment reserve has been found that will remain on the sidelines until it robs a million dollars.

Meanwhile, Chinese citizens have been targeted by criminals and armed rebels, and five Chinese were kidnapped in November after being attacked by a Chinese-owned gold mine in eastern Congo. A month later, Kinshasa The Chinese embassy in China urged citizens to leave three people. For a safer part of the country as violence worsens in mining-rich areas.

The embassy said in a March 2 recommendation, “Please fully understand the seriousness and complexity of the current security situation. Carefully plan for emergencies to coordinate production, operations and staffing in case of an emergency. Please be prepared. “

Write to Nicholas Bariyo (nicholas.bariyo@wsj.com)

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