Chinese company’s acquisition of Congo cobalt mine has repercussions for car industry
As China Molybdenum announced it was buying one of Africa’s largest copper mines earlier this month one thing was soon clear: the acquisition was about far more than the red metal.
The $2.65bn deal, the biggest private investment in the Democratic Republic of Congo’s history, is instead designed to secure China’s supplies of cobalt, a once niche raw material that is crucial to developing batteries for electric cars.
The purchase of the Tenke mine, which contains one of the world’s largest known deposits of copper and cobalt, shows how Chinese companies are now moving to take a dominant position in battery materials as the country prepares to shift its economy from heavily polluting industries.
Companies that make batteries for carmakers, from Tesla Motors to General Motors, will be increasingly reliant on Chinese-controlled supply chains as they scale up production of the electric cars western policymakers hope will help cut emissions and reliance on imported oil.
“The majority of the cobalt is heading straight to China,” said Edward Spencer, an analyst at metals consultancy CRU. “Their global hold is huge.”
If the Tenke mine deal goes through, Chinese companies will be responsible for around 62 per cent of global refined cobalt production next year, according to CRU estimates. Demand for the material is expected to soar by more than two-thirds over the next decade.
In many ways, China is following a familiar playbook. At the turn of the millennium, the country moved to secure supplies of traditional commodities like oil and industrial metals, sometimes through acquisitions, other times through investments and loans-for-oil deals with countries such as Angola and Venezuela that held big deposits of the raw materials.
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