Chinese critical minerals monopoly challenged

By Gregory Simpkins

As the international community moves toward an energy future featuring renewable energy, the source of critical minerals and the location of their processing become increasingly important. Some time ago, I wrote an article on the domination of these minerals by the People’s Republic of China (PRC), especially their processing, labeling the Asian giant “the mineral king”.

In light of the importance of these minerals to the world’s energy future, some in the international community – looking at the statistics – are uncomfortable with the current situation and vowing the make a change.

Africa plays a significant role in this matter. For example, an estimated 68 percent of worldwide cobalt production occurs in the Democratic Republic of Congo (DR Congo), which also is believed to possess 48 percent of global reserves.

According to a report on the Zerohedge.com website, the high quantity of DR Congo cobalt is matched with high-quality cobalt. While the global average of mineral ores contains .6 to .8 percent of cobalt, DR Congo’s ores yield concentrations of 3 percent.

China currently controls only an estimated 8 percent of Africa’s mining sector, less than half its Western competitors, but according to a study by the Georgetown University Center for Security Studies, what concerns the US is China’s monopoly over mining in Africa’s copper belt (the DR Congo and Zambia), and its substantive recent investments into lithium production in Zimbabwe, which holds Africa’s largest reserves of lithium.

These investments allow China to dictate the global supply chain for renewable batteries and electric vehicles.

In the DR Congo, the study said, China currently owns 72 percent of the cobalt and copper mines including the Tenge Fungurume Mine, which alone produces around 12 percent of the world’s cobalt production. China’s mining operations in these three countries give the PRC a significant lead in semiconductor and battery production, and thus in the field of climate security technologies.

This leaves the rest of the world increasingly dependent on Chinese innovation and manufacturing to drive global energy transitions and address climate change.

Zerohedge.com reports that rare earth minerals are primarily located in Asia, with China (38 percent) and Vietnam (19 percent) holding the greatest reserves. Brazil has 18 percent of known global reserves.

Overwhelmingly, China is the main hub for processing critical minerals across the board. The country is responsible for processing 65 percent of global lithium mined, 74 percent of cobalt, 100 percent of natural graphite, and 90 percent of rare earths. China also produces the highest share of both natural graphite (72 percent) and rare earths (70 percent).

But will the Western effort involve value-added in Africa? China is turning toward such ventures.

The U.S. Geological Survey’s list of critical minerals includes the following:

However, despite the significance of Chinese involvement in mining in Africa, mining was not a specific topic of discussion at the recent Forum on Chinese-African Cooperation (FOCAC). The communique discussed a variety of topics, including health, technology, investment and peace efforts, but not specifically the mining sector.

What to Do About the Mineral King

Western nations are directing their development finance and export credit agencies to work with private industry to support critical minerals projects, in a drive to break China’s chokehold over a sector that is essential for high-tech industries. The Minerals Security Partnership (MSP), a coalition of 14 nations and the European Commission, unveiled a new financing network at an event in New York on the margins of the recent UN General Assembly meeting as they try to ramp up international collaboration and pledge financial support for a huge nickel project in Tanzania, backed by mining company BHP.

A joint statement says the network will “strengthen co-operation and promote information exchange and co-financing”. It lists 10 critical minerals projects that have already attracted support from MSP partner governments.

Representatives of BlackRock, Goldman Sachs, Citigroup, Rio Tinto and Anglo American were invited to the meeting, amid a push to attract private investors and miners to invest further in the sector.

But will the Western effort involve value-added in Africa? China is turning toward such ventures.

Jose Fernandez, US under-secretary of state for economic growth, said in an interview with the Financial Times that a further 30 critical minerals mining projects are being evaluated by the MSP, as Western governments race to secure the raw materials needed to make everything from electric vehicles to advanced weapons.

“What China is doing is following the playbook of the monopolist to drive out competition,” said Fernandez, who accused Beijing of engaging in “overproduction and predatory pricing” to retain its grip on global supply of critical minerals. “We realize we can’t solve this problem with any one single country; we are stronger together,” he said in the interview.

Given the current tensions between China and the US and other Western nations and the ambitious timetable for abandoning fossil fuels, time is running out for the diversification of sourcing and processing of critical minerals. If a conflict with China breaks out – say over Taiwan independence – the rest of the world could see an embargo on the minerals they most need to function in the 21st century technological environment.

Gregory Simpkins, a longtime specialist in African policy development, is the Principal of 21st Century Solutions. He consults with organizations on African policy issues generally, especially in relating to the U.S. Government. He further acts as a consultant to the African Merchants Association, where he advises the Association in its efforts to stimulate an increase in trade between several hundred African Diaspora small and medium enterprises and their African partners.