DRC: Chino-dependence on cobalt, the need for a geostrategic rebalancing

The Democratic Republic of Congo is faced with the imperative to control and capitalize the Congolese Chinese dependence on the production of Cobalt. Hence the need for this country to be able to play its role of promoting the geostrategic balance of powers while privileging its interests.

 To achieve this, the analyst Engunda Ikala Alain recommends the development of this interministerial decree defining the conditions of access, exploitation and marketing of strategic minerals. This will allow the DRC to become, in the next ten years, (1) a major player in the global ecological transition, (2) a geostrategic balance of powers and (3) will develop its industrial park (Refining plant ) . Below, the entirety:

CONTEXT

Ecological transition is a concept which aims to set up a new economic and social model so as to meet the ecological challenges of our century … By transforming the current energy system, ecological transition thus makes it possible to reduce its environmental impact.

Thus, faced with the use of fossil fuels in the strategic automotive sector, the electric car unanimously seems to be an adequate response to meet this ecological challenge. To do this, it should be noted that the construction of this type of vehicle involves the manufacture of battery, of which cobalt ore is an essential element.

Moreover 45% of the cobalt produced in the world is used in the manufacture of this type of battery. If we add to this the fact that electric cars could represent 22 to 30% of the world fleet of automobiles within 10 years against less than 3% today (McKinsey studies), this demonstrates the more than strategic nature of this mineral both in the ecological transition but also in the world economy.

PROBLEM

Faced with this situation, the DRC is proving to be an important actor. In fact, about 80% of the world production of cobalt takes place in the DRC which, in addition, holds two thirds of the world reserves.

In view of this fact, we have to conclude that the global ecological transition is taking place in the DRC in particular. However, as a New York survey released last week, ”  15 of the 19 cobalt-producing mines in Congo were owned or funded by Chinese companies … received at least $ 12 billion in loans and other funding from the Congo, however. of institutions supported by the State (Chinese)  ”

Moreover, adds the survey ”  five largest Chinese mining companies in the Congo had lines of credit with banks supported by the State (Chinese) for a total amount of 124 billion dollars  “.

At present, all Chinese-owned companies have achieved half of the production of cobalt last year and 80% of the exports of this mineral go to China which happens to be, moreover, the world leader in cobalt refining .

In view of these facts, even if the DRC holds 2/3 of the world’s cobalt reserves in its subsoil, we might as well conclude that it is the Chinese government which, through the companies it finances, not only controls the cobalt production in the DRC but also the entire cobalt value chain via its refining capacity.

A situation which places the world and the DRC in a form of Chinese dependence in a sector as strategic as the production of cobalt, essential for the ecological transition and therefore for the future of the planet. Not that I am anti-Chinese, far from it, but I am more of those who think that we should not put all our eggs in one basket and that the concentration of industrial capacities in a sector X on which depends the survival of the planet should not be concentrated in the hands of one power. Why ?

If the Chinese government continues to directly or indirectly control the production and refining of the ore essential for the production of electric batteries with which 30% of the world’s automobile fleet will be equipped within 10 years, it will have the power to:

• distort global competition by favoring Chinese companies privileged access to the resource;
• sanction a company or a country by blocking its access to DRC cobalt via Chinese companies in the DRC;
• control the world price of cobalt via the decrease or increase in the production of Chinese companies in the DRC.

I insist ! I am not claiming that the Chinese Government will do what is said in the previous paragraph, but that, given the financial influence it exercises directly or indirectly via Chinese mining companies operating in the production of cobalt in the DRC, in the long run, it will have the power to do so.

It is therefore imperative for the DRC to be able here to play its role of promoting the geostrategic balance of the powers while privileging its interests.

ACTIONS

According to the Mining Code, there is the notion of “strategic substance”, in its definition it is ”  any mineral substance which, depending on the international economic situation of the moment, at the discretion of the Government, is of particular interest with regard to of the critical character and of the geostrategic context  ”.

To this end, article 7bis al.1 of the Mining Code tells us that “  if the national or international economic situation allows it, the Prime Minister may, by decree deliberated in the Council of Ministers, on the advice of the sectoral ministers concerned, declare certain mineral substances strategic substances  ‘.

To do this, the second paragraph of the same provision specifies that ”  access, research, exploitation and marketing of strategic substances are governed by specific regulatory provisions  “

In application of the above-mentioned provision, the Prime Minister issued Decree No. 18/042 of 24 November 2018 declaring cobalt, geranium and colombo-tantalite “Coltan” as strategic mineral substances which stipulates in its article 1 ^st that ”  cobalt, geranium and colombo-tantalite are declared strategic substances in the Democratic Republic of Congo  ” and adds, in its article 2, that ”  the conditions of access, research, exploitation and marketing of these substances will be fixed by a particular regulation taken by decree of the ministers having mines and finance in their attributions  ”.

Unfortunately, the said interministerial decree is still not taken at the present time.

RECOMMENDATIONS

However, this Decree, with regard to the issue of Chinese hold on the cobalt value chain, constitutes, for the DRC, an opportunity to play its role of geostrategic balance of powers in a strategic sector. To do this, I propose that this Decree be drawn up based on the following principles:

• Terms of Access 

Access to the new certified strategic ore deposit cannot be granted to companies whose origin of capital favors a geostrategic concentration of the global or national production capacity between the companies of an unconlutive company.

• Operating conditions

– Taking into account that article 342 ter of the mining code fixes the principle of the obligation of treatment and transformation of ore at the local level, industrial companies have the obligation not only to treat the ore but also to refine it at the local level. 80% of their productions within ten years at the local level under penalty of sanction. Condition: Incentives for investment in electricity and support for electricity production initiatives.

– 1% of industrial production of strategic ore is reserved for the State as a national strategic reserve.

• Marketing conditions 

The State sets annually, in view of the outlook for world demand and these economic and geostrategic objectives, the level of the maximum annual production of strategic minerals.

CONCLUSION

If the Congolese state finally decides to take this interministerial decree on strategic minerals in order to materialize the above-mentioned principles in particular, it will become, in the next ten years, (1) a major player in the global ecological transition. , (2) a geostrategic power balance factor and (3) develop its industrial park (refining plant).

The DRC must no longer limit itself to being a simple commodity annuitant and it must give itself the means to sit at the table of world decision-makers and that voice can count. I therefore invite, in reality, the Congolese government to materialize the “strategic character” of cobalt which should not be limited, as is the case today, to a simple declaration.

The DRC is not destined to remain a poor country which is satisfied with the mining rent (crumb) of the powerful. It is destined to become a world power. Global dependence on Congolese cobalt is an opportunity, it is up to it to seize it.