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In the new scramble for Africa’s minerals, the continent’s resource curse must be turned into a blessing

In the new scramble for Africa’s minerals, the continent’s resource curse must be turned into a blessing
A worker guides stacks of copper plates ready for shipping at the Mufulira refinery, operated by Mopani Copper Mines Plc, in Mufulira, Zambia, on Friday, 6 May, 2022. (Photo: Zinyange Auntony/Bloomberg via Getty Images)

On the ground, Chinese companies in Africa are roaring ahead in the lithium rush. Demand is exploding, and experts warn there will not be enough copper and lithium sources to meet global demand by 2030, so the competition is only likely to intensify.

Early in July the presidents of Angola, the Democratic Republic of Congo and Zambia launched the Lobito Atlantic Corridor project along a railway line that runs almost 1,300km from the Angolan port of Lobito to the DRC border, continuing for 400km to the heart of the copper and cobalt mines around Kolwezi.

An extension is underway to reach the Zambian side of the Copperbelt.

The DRC produces 70% of the world’s cobalt, a critical component of electric vehicle batteries, and both the DRC and Zambia are significant producers of copper.

The Lobito Corridor is designed to spur economic development, but at its core it will be connecting processed cobalt and copper from Zambia and DRC to global supply chains.

Swiss commodity trader Trafigura leads the operating consortium that will be moving the “green” minerals to market via Lobito, but the project has US fingerprints all over it.

It is a piece of the Biden administration’s policy of building back America’s manufacturing base while helping to rewire the global economy for the greatest transition since the Industrial Revolution and ensuring that not all battery minerals critical to the transition end up in China.

The brain behind the grand plan of which the Lobito corridor is a crucial component is a 50-year diplomat called Amos Hochstein whose official position is “Special Presidential Coordinator for Global Infrastructure and Energy Security.”

Though Hochstein has been at pains to stress that the US is not doing this because of China, it is clearly an attempt to counter China’s global dominance.

China’s dominant capacity

China processes the overwhelming bulk of five out of the six minerals most critical to green technology — copper, cobalt, lithium, graphite and rare earths — and is the biggest consumer of all six including nickel.

If the rest of the world is to meet its goals for the switch-over to electric vehicles — and the extreme temperatures in the northern hemisphere this year have focussed many minds — this equation is going to have to change.

Hochstein said at an event at the Wilson Centre in Washington DC in March that “we need to make sure that as we are going through a revolution in energy and technology that everyone around the world gets to benefit from it and rises at the same time — and that the supply chains around the world are diversified and secure.”

The manufacture of EV batteries is regarded as strategic in the way that China’s domination of the solar panel industry is not.

The US says its concern is to prevent the new energy economy from becoming a repeat of the fossil fuel era where a handful of countries, mostly in the Middle East, produced the bulk of the world’s oil and gas, creating artificial shortages and combustible geopolitics.

Hochstein compliments China for the way it has built its dominant position but says:

“We want there to be multiple hubs of production of critical minerals, all the way to the refining and the manufacturing.”

African producers of raw materials such as the DRC and Zambia stand to become major processing and manufacturing hubs. The US has also backed nickel and cobalt processing in Tanzania and a Tanzanian company, Lifezone Metals, last week listed on the New York Stock Exchange.

However, some African leaders are not convinced that this seeming altruism will translate into more widely shared benefits. African leaders at last week’s US business summit in Botswana expressed alarm at the subsidies in the US’s Inflation Reduction Act and see the energy transition will mainly boost domestic industry in the US.

Equally, concern in Europe at the way the $890-billion IRA privileges US companies led this week to negotiations on a Critical Minerals Agreement in which EU countries will qualify for the same subsidies as US companies.

People like Hochstein claim that the whole point of the transition is to broaden and diversify. The announcement of the Lobito Corridor was made at the G7 meeting in Hiroshima in May, indicating that the US is not going it alone. Germany for one is also looking to integrate African critical mineral-producing countries into supply chains as part of their energy transition.

Meanwhile, on the ground, Chinese companies in Africa are roaring ahead in the lithium rush.

Many of these companies are small to medium enterprises, some legal, some informal. They are first to apply for licences, they are on the surface or at the mine gates buying raw product from artisanal miners, they handle the logistics in tough environments, and they process the ore in rudimentary plants.

After Zimbabwe refused to export raw lithium, Zhejian Huayou Cobalt commissioned a $300-million lithium concentrator at its mine outside Harare, the first plant of its kind in Africa.

Supply concerns

The bigger publicly listed Western mining companies — conscious of environmental issues, of security in places like Nigeria, and of violating anti-corruption laws — are far more cautious and are now being prodded to get bolder.

With demand exploding, Adair Turner, chair of the Energy Transitions Commission, warns that there will not be enough copper and lithium sources to meet global demand by 2030, so the competition is only likely to intensify.

“New mines and refineries must be built, financial flows to developing countries increased, and planning systems reformed to allow some mine and refinery development in rich countries,” she wrote in the Financial Times.

The longer-term outlook for 2050 is more positive. “New battery designs have reduced future cobalt needs by 50% in just five years; nickel-free LFP batteries are now being used in 40% of electric vehicles — up from 7% in 2019; and by 2040, over 50% of lithium used in new batteries could come from recycling,” she wrote.

The question is how to make sure that the benefit flows to African countries. Can all this frenetic activity swing the resource curse into a blessing for Africa?

Given the history, it’s going to take some doing to convince the sceptics. DM


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