It is now up to the leader of DR Congo to be smart [ area of DR Congo 905,600 mi² ( say 2 345 493.23 Km2) ]
The U.S. And China Are Rushing To Secure Resources In DR Congo
By ZeroHedge - Dec 27, 2022, 12:00 PM CST
The U.S. is looking to secure battery metals and other crucial commodities in Africa.
The DRC is sometimes called the “the Saudi Arabia of the electric vehicle age” because it produces roughly 70 percent of the world’s cobalt.
For more than a decade, Chinese companies have spent billions of dollars buying out U.S. and European miners in the DRC’s Cobalt belt.
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Authored by Conor Gallagher via NakedCapitalism.com, As the US intensifies its efforts to cut China off from advanced semiconductors, it is also making a run at the world’s most important source of minerals used in tech: the Democratic Republic of Congo (DRC).
[b]The DRC is sometimes called the “the Saudi Arabia of the electric vehicle age” [/b]because it produces roughly 70 percent of the world’s cobalt, which is a key component in the production of lithium-ion batteries that power phones, computers, and electric vehicles. Electric vehicle sales are predicted to grow from 6.5 million in 2021 to 66 million in 2040.
The DRC is also Africa’s largest copper producer with some of the mines estimated to contain grades above 3 percent, significantly higher than the global average of 0.6 – 0.8 percent. It also has 70 percent of the world’s coltan, which is also critical to cell phone and computer manufacturing. All in all, it is estimated that the DRC has $24 trillion worth of untapped mineral resources.
On Dec.13, the US signed deals with the DRC and Zambia (the world’s sixth-largest copper producer and second-largest cobalt producer in Africa) that will see the US support the two countries in developing an electric vehicle value chain. US Secretary of State Antony Blinken said the US Export-Import Bank and the International Development Finance Corporation will explore financing and support mechanisms, and the US Agency for International Development, commerce department and Trade and Development Agency will provide technical assistance.
Aside from a Jeff Bezos and Bill Gates-backed copper-cobalt mine in northern Zambia, details are sparse, but it does mark a major turning point for the DRC.
Related: WTI Oil Jumps Above $80 As China Scraps Covid Restrictions
For more than a decade, Chinese companies have spent billions of dollars buying out U.S. and European miners in the DRC’s Cobalt belt, leading to control of 15 of 19 of the primary cobalt mines in the country.
China sources 60 percent of its cobalt needs from the DRC, and about 80 percent of the world’s cobalt processing occurs in China before being incorporated into lithium-ion batteries.The DRC-China relationship is on the rocks, however, and Chinese mining is starting to encounter an increasing amount of bumps in the road.
In July the DRC halted exports from the world’s second biggest cobalt mine amid an ongoing dispute between the Chinese mining company and the DRC state mining company. (China Molybdenum bought the controlling stake in the project in 2016 from US company Freeport-McMoRan.)
With US encouragement, last year DRC President Felix Tshisekedi began accusing his predecessors of signing lopsided contracts with Chinese mining companies and is now attempting to renegotiate them. In a rare sign of DRC bipartisanship, opposition politician Adolphe Muzito who was prime minister at the time the deals were signed with China, has also come out in support of renegotiating the deals with Beijing.
China defends the deals, saying it has built several projects in the Central African nation despite obstacles, increased tax revenue, created more jobs, and provided investment in infrastructure projects such as roads, hospitals and hydropower stations.
But the spat over the Chinese deals comes at a time of increased Washington pressure on Beijing and when the cobalt supply chain is already under pressure due to increased demand from the battery sector and Covid-19 logistics issues.
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The Financial Times, citing a Goldman Sachs forecast, reported in November that the US and Europe could cut their dependence on China for electric vehicle batteries by 2030 through more than $160 billion of new capital spending. It appears the West is trying to recoup lost ground and erect roadblocks in China’s supply line from Africa.
The West has long criticized China for its loans to African nations, which it claims are designed to seize African assets offered as collateral. (African countries currently owe three times more debt to Western institutions compared to China.)
Deborah Bräutigam, the Director of the China Africa Research Initiative at the Paul H. Nitze School of Advanced International Studies, has written that this is “ a lie, and a powerful one.” She wrote, “our research shows that Chinese banks are willing to restructure the terms of existing loans and have never actually seized an asset from any country.”
Even researchers at Chatham House admit that’s not the case, explaining that the lending has instead created a debt trap for China. That is becoming more evident as nations are unable to repay, largely due to the economic fallout from the pandemic and the US proxy war against Russia in Ukraine.
While China’s initial instinct has been to try and tackle debt repayment issues at a bilateral level, typically by extending maturities rather than accepting write-downs on loans, it’s increasingly getting involved in multilateral talks that include US-backed institutions like the IMF. China (and the borrowing country) are often getting the short end of the stick.
Take the case of Zambia, which got a $1.3 billion loan from the IMF in September. From The Diplomat:
Zambia will shift its spending priorities from investment in public infrastructure – typically financed by Chinese stakeholders – to recurrent expenditures. Specifically, Zambia has announced it will totally cancel 12 planned projects, half of which were due to be financed by China EXIM Bank, alongside one by ICBC for a university and another by Jiangxi Corporation for a dual highway from the capital. The government has also canceled 20 undistributed loan balances – some of which were for the new projects but others for existing projects. While such cancellations are not unusual on Zambia’s part, Chinese partners account for the main bulk of these loans…
Read more @ https://oilprice.com/Energy/Energy-General/The-US-And-China-Are-Rushing-To-Secure-Resources-In-DR-Congo.html
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