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How does the USA secure their cobalt sourcing in the DRC ?

The project is "entirely in line with the geopolitical objectives of the United States", says Roya Rahmani, vice-president of Delphos International, a US-based investment company. It was in a New York office on September 26, 2023, that the former American ambassador, now in private business, the CEO of a Congolese mining company and President Félix Tshisekedi met around the same table. American companies need cobalt, the Congolese subsoil contains 70% of known reserves, and elections in the DRC are fast approaching. All in all, a win-win deal for political and economic interests.

A cobalt-hungry American market

Growth is energy! And while the USA still relies heavily on greenhouse gas-emitting fossil fuels, notably oil (36% of energy consumed) and gas, the US Administration has set clear ambitions: "By 2050, renewable energy sources are expected to provide 42% of US electricity, up from about 20% today."

In August 2022, the Inflation Reduction Act [currently pending in Parliament due to a potential shutdown] was passed, enabling the investment, through loans or subsidies, of 369 billion USD in new energy transition markets: electric vehicles, solar panels, transformers, heat pumps and wind turbines.

The tone is set, and the wheels are in motion. The market for energy transition technologies is booming: electric cars, with almost 3 million vehicles on the road in the USA, are up 40% on 2021, in a market estimated at 28 billion USD. Solar panels have seen an average annual growth rate of 24% over the past 10 years, powering around 27 million homes by 2022, with the ambition of increasing total production from 153 GW to 375 GW by the end of 2028. As for strategic transformers and grid components, according to the US Department of Energy, demand is set to rise by 60% between now and 2030, and could triple by 2050 to meet the country's needs.

The US market for energy transition technologies such as batteries for electricity storage, magnets and magnetic cores, however, depends on the supply of strategic metals to manufacture these new tools. The boom in this market is increasing demand for metals, particularly cobalt. The problem is that the USA mines too little for its domestic market.

From one addiction to another

In 2022, the U.S. Department of Energy and the U.S. Geological Survey (USGS) presented a list of critical metals according to their importance in energy production and supply risk between now and 2035. Cobalt tops the list. According to the USGS, the USA imported around 9,900 tonnes in 2021. The total estimated value of cobalt consumed in 2021 was $340 million. The main importing countries are Norway (20%), Canada (16%), Japan (13%) and Finland (11%). With the DRC accounting for 70% of total cobalt production (120,000 tonnes in 2021) and estimated reserves of 3.5 million tonnes, Americans are increasingly turning their attention to this huge Central African country. "Africa is like a revolver whose trigger is in the Congo", said Frantz Fanon.

Both hands in the cobalt

EVelution Energy, headed by Navaid Alam, plans to build a cobalt sulfate plant in the state of Arizona to produce batteries for the American electric vehicle market. The American company is therefore looking to source cobalt. In early October 2023, it signed an agreement with Luxembourg-based Eurasian Resources (ERG) to purchase 3,000 tonnes of cobalt per year for five years from 2026. The cobalt is extracted at the Boss Mining mine near Lubumbashi, Kakanda and Luita, and then sent to the Metalkol processing plant, which transforms the cobalt into cobalt hydroxide. Evelution will then buy this hydroxide to transform it into cobalt sulfate at its future plant in Arizona. This cobalt sulfate will eventually find its way into one of the 3 million electric vehicles on American roads.

Speaking on the sidelines of LME Week in London, ERG CEO Benedikt Sobotka said: "This collaboration supports the transition to green energy, and should also help bring much-needed cobalt refining capacity to the US market". Indeed, the CEO of this company, which belongs to the Kazakh ENRC group, is right: there are currently no commercial-scale cobalt processing facilities in the USA, and over 70% of the world's cobalt sulfate production is based in China. Enough to worry defenders of US industrial sovereignty.

With this in mind, Delphos International intends to invest USD 350 million in Buenassa SARL, a Congolese company headed by Eddy Kioni, with the aim of redirecting all artisanal production to a refinery site managed by Buenassa. The Congolese company will be working in conjunction with Entreprise Général du Cobalt (EGC), headed since June 2023 by Eric Kalala Nsantu. A subsidiary of GECAMINES created in 2019, EGC has been mandated by the State to exercise a purchasing monopoly on cobalt from artisanal mining operations, which requires processing prior to export.

American support before the elections?

These two companies work hand in hand with the Congolese state, whether through the creation of joint ventures with GECAMINES, the granting of permits and authorizations, the operationalization of mines and the transport of products, or the payment of taxes. These contracts, which find their way into the coffers of private companies, feed the various treasuries of a state that is preparing for an upcoming election.

Antony Blinken met Felix Tshisekedi in August 2022

Incumbent President Tshisekedi is standing again for the presidential election scheduled for December 2023 amid a difficul context, particularly with the violences in the eastern Congo. An election that the Americans openly support. The American Embassy in Kinshasa, represented by Lucy Tamlyn, declared on September 5, 2023: "The United States of America recognizes the ongoing efforts of stakeholders in the elections in the Democratic Republic of Congo to ensure that this electoral cycle is inclusive, transparent and peaceful. We appreciate the ongoing efforts of the Independent National Electoral Commission to adhere to its electoral timetable, and note that candidate registration for the legislative and local elections was generally completed successfully, although difficulties remain in some territories."

Moreover, the United States has also recently supported President Tshiskedi in the armed struggle in the east of the country, and has "called on Rwanda to end its support for the M23 and reiterated the need for all state actors to cease collaborating with the Forces Démocratiques de Libération du Rwanda (FDLR) and other non-state armed groups."

The Americans have a vested interest in preserving some form of stability in the region, especially as they are injecting more and more effort into it, as with their investment in Lobito Railways, in order to secure their supply of metals essential to their industry, including the famous and strategic cobalt.

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