China's increasing control of copper and cobalt resources in the Democratic Republic of Congo could pose a threat to Western market participants, according to a report published by market analyst Roskill, according to Mining Weekly.
The threats are related to security of supply, and growing ties between the two countries could pose a threat to Western countries seeking to build a self-sufficient, localised battery supply chain.
As early as early January, China announced that it would waive about US $28 million in loans to the Democratic Republic of Congo, which will be repaid by the end of 2020, and would provide US $17 million in other financial support to help the country overcome the health crisis caused by the Covid-19 pandemic.
During the visit of Chinese Foreign Minister Wang Yi, the two countries also signed a memorandum of understanding on One Belt And One Road cooperation, and the Democratic Republic of Congo now becomOne Belt And One Roadhina's 45th BBB1 partner in Africa.
Also known as the "New Silk Road," the plan will consist of railways, pipelines, highways and ports that will stretch west through the former Soviet republics and south to Pakistan, India and Southeast Asia.
Roskill wrote: "China's decision to write off the debts of the democratic republic of the Congo, and welcome the country become" in "the new partners initiative, which could further promote the cooperation between the two countries, and inspire more Chinese mining companies, such as China molybdenum (luoyang molybdenum), Congo copper and cobalt industry for new investment, increase their ownership of local mines."
What should the West do?
According to 2019 data from the US Geological Survey, the Democratic Republic of Congo holds more than 51 per cent of the world's cobalt reserves.
Roskill estimates that the DRC will produce about 90,000 tonnes of cobalt from various intermediates by 2020, accounting for nearly 70 per cent of the world's total cobalt raw material production.
Thanks to decades of investment and development in the Democratic Republic of Congo, more than 40 percent of cobalt mineral energy is already controlled by Chinese companies, and several resource-for-infrastructure agreements have been signed and implemented since the 1990s.
"China is playing a more dominant role in cobalt refining, particularly in the production of chemicals suitable for battery applications, accounting for about 80 per cent of global production of cobalt sulphate and oxides in 2020," the report said.
How will the west mitigate this supply risk in the coming years?
Locking in raw materials with long-term agreements is a good first step, Roskill said.
They should also make use of alternative resources, such as recycling, and develop resources elsewhere.
