African country wants to bring its mining industry closer to Europe and America

In recent decades, China has become the main foreign investor in many African countries, with the Democratic Republic of the Congo being the center of its investment on the continent. The African country is the largest producer of cobalt on the planet compared to the rest of the world, and the second most important producer of copper, two key metals for the electrification of energy networks taking place in the world. China entered the African country and other neighbors of the continent with the aim of ensuring the supply of key raw materials for its future, but now The Congolese government wants to regain control of its mining resources and is moving closer to rival China. The country’s mining minister admits that they are looking for new partners and want to get closer to the United States and European markets.

In recent years, China has adopted a strategy of strengthening relations with African countries. The idea of ​​the Asian country was to compete with the Western bloc led by the United States, gain a presence in Africa, ensure the production of raw materials vital for its economic development, and connect the continent with the Silk Road project. Launched in 2013.

“China’s activity in Africa began with Beijing’s support for liberation movements fighting colonial control. Since the 1990s, China’s trade efforts have intensified, and were formalized with the Belt and Road Initiative in 2013 , which is an effort to gain political influence and improve trade relations with the developing world,” an associate at the United States Institute for Peace and a member of the international advisory board of Afrobarometer, a think tank focused on African studies. Thomas Sheehy explains.

“China’s activities include lending money for the development of infrastructure that is built by Chinese companies, and for the mining of basic resources by Chinese companies,” Sheehy explains, explaining how “Chinese presence has grown in almost all African countries, and influence in Africa has increased significantly since the Cold WarWhile the American has stagnated,” he warned.

Already in 2018, manager Pimco warned through the International Monetary Fund (IMF) of the loss of influence of the Western Bloc in Africa and the threat to the sustainability of the debt of these countries, noting that “they are a After repeatedly borrowing from China and the markets, they are again burdened with unsustainable debt.

China’s entry into the African continent has not ended the conflicts shaking it. In the Democratic Republic of the Congo itself, conflict has raged in the east of the country since December last year between rebel groups supported by the governments of Uganda and Rwanda, as well as militias affiliated with the Islamic State and a number of other militias. Hundred other armed groups.

China-Congo: relations based on copper and cobalt

In the Democratic Republic of the Congo, China’s interest has been particularly focused on the two most important raw materials for the energy transition toward renewable sources and the electrification of the automobile fleet: copper and cobalt. The African country is the planet’s main producer of cobalt, a key component for electric car batteries, and recently overtook Peru as the second-largest producer of copper, the metal most used for transporting electrical energy. Is used more.

According to trade data from the Economic Complexity Observatory, Congo’s main exports to China in 2022 were $6.72 billion of refined copper, $5.74 billion of cobalt and $1.37 billion of crude copper. In the eyes of the Congolese government, China’s control over the country’s mineral resources has reached extreme limits, which has made a significant change in its mining policy to approach new business partners in this industry.

This week, Congo’s mining minister, Kizito Pacabomba, announced that the country wants to attract “better investors, more investors and diverse investors,” a message just moments after the government vetoed the purchase of the country’s copper exploitation rights. Came after days. Cobalt mine to a Chinese company. Mining company Chemaf, controlled by Singapore group Trafigura, holds the exploitation contract for the Mutoshi project, and in June it announced it would sell the rights to Chinese group Norin. However, Congo’s state-owned mining company Gecamines has vetoed the operation, claiming it has the authority to approve changes to the country’s key assets.

Changing the government’s veto on the mining project hides an uncomfortable reality for Beijing: Congo seeks to diversify its trading partners, threatening the Asian country’s dominance over the African republic’s resources. It is estimated that the deposit will be capable of producing 16,000 tonnes of cobalt and 50,000 tonnes of copper per year, amounting to approximately $400 million and $500 million in annual revenues respectively at current market prices. Minister Pacabomba has acknowledged that he is evaluating other “strategic options” regarding who exploits the country’s mines and has not hesitated to make an example of this veto: “We have paralyzed this transaction. “And we’re going to look at the different options that we have.” ” He says. .

In a country that accounts for three-quarters of the world’s cobalt production, the government wants to keep close control over the basic resource, especially considering that raw material prices are rising as Chinese companies increase production at the country’s mines. Have fallen. market. If $81,800 was paid for a ton of cobalt in 2022, today prices have fallen to about $24,000, a stunning decline.

Outlook for the United States and Europe

The new strategy of the Congolese government is based on the search for new trading partners. Last August, the country signed a $1.9 billion agreement with the United Arab Emirates Concessions for the mining of tin, tantalum (a metal used for the electronic component industry), tungsten and gold, to create at least four new mines in the areas of South Kivu and Maniema.

But that’s not all: the country is promoting the improvement of the railway infrastructure that connects the Kolwezi mining basin to the Angolan border, and thus uniting the producing region with the Angolan port of Lobito on the Atlantic Ocean. As Bloomberg reported, the United States has stepped in with a $553 million investment to improve the Angolan portion of the railway route. Pacabomba assures that this will bring Congo’s mining production closer to the United States and European markets. “This will allow us to diversify export routes so that they do not just look towards the east,” the minister highlighted. If China wants to maintain its dominance over Congo’s industrial ‘gold’ then it will have to improve its relations with this country.

WhatsAppTwitterLinkedinBelaud