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Cobalt, Copper: China strengthens relations with DRC through debt relief and Belt and Road Initiative

Cobalt, Copper: China strengthens relations with DRC through debt relief and Belt and Road Initiative

In early January, the Foreign Minister of China, Wang Yi, visited five African countries: Nigeria, the DRC, Botswana, Tanzania and Seychelles. During Wang’s meeting with Congolese President Felix Tshisekedi, it was announced that China would cancel an estimated US$28M of loans to the DRC, repayment of which were due by the end of 2020, and would provide US$17M in other financial support to help the country overcome COVID-19’s impacts. The two countries also signed a MoU on the Belt and Road Initiative cooperation, with the DRC now becoming China’s 45th Belt and Road Initiative partner in Africa.

Roskill View

No other country in the world by far has as sizable cobalt resources as the DRC. According to USGS, the country had over 51% of global reserves in 2019. Roskill estimates that the DRC produced 90kt Co in various intermediates in 2020, representing nearly 70% of the total cobalt feedstock production globally. Within the DRC, over 40% of the cobalt mining capacity is now controlled by Chinese companies as a result of decades-long investment and development in the country, with several resource-for-infrastructure deals having been signed and implemented since the 1990s.

On the cobalt refining side, particularly for production of chemicals suitable for battery applications, China plays an even more dominant role, with its production of cobalt sulphate and oxides accounting for around 80% of the global total output in 2020.

China’s decision to write off debts from the DRC and welcome the country as a new partner for the Belt and Road Initiative is likely to further drive cooperation between the two countries and incentivise more Chinese miners, like China Molybdenum, to make new investment into the Congolese copper and cobalt industry, increasing their ownership in local mines.

However, a stronger Sino-Congolese partnership and China’s increasing control of copper and cobalt resources could pose a threat to western market participants. Even closer ties will cause concerns about security of supply and pose problems to those in the West looking to build up self-contained localised battery supply chains. Roskill believes that locking in feedstock with long-term agreements, utilising alternative feeds, such as recycling, and developing resources elsewhere, are some of the options available to mitigate such supply risk in the years ahead.

Roskill’s Cobalt: Outlook to 2030, 16th Edition report was published in October 2020, and outlines industry trends and forecasts for the next decade. The report provides an in-depth analysis on cobalt supply, end-use applications and sustainability issues. 

Roskill’s Cobalt Cost Model Service offers an in-depth understanding of the cobalt supply chain, from the evaluation of projects through to the production of battery-grade cobalt chemicals. 

Join Roskill for its free webinar on The Evolution of Cathode Chemistries on 24th February to hear our current analysis on lithium-ion battery cathodes from six perspectives: market, business, technology, economics, patents, sustainability.

roskill.com | gulfmorningnews.com

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