Fortune Minerals : COBALT NEWS

The New Yorker - May 24, 2021

Cell phones and electric cars rely on the mineral, causing a boom in demand. Locals are hunting for this buried treasure-but are getting ...

informally in his province. Among the forty or so sites where artisanalminers are employed as day laborers is the Congo Dongfang mine in

In June, 2014, a man began digging into the soft red earth in the back yard of his house, on the outskirts of Kolwezi, a city in the southern Democratic Republic of the Congo. As the man later told neighbors, he had intended to create a pit for a new toilet. About eight feet into the soil, his shovel hit a slab of gray rock that was streaked with black and punctuated with what looked like blobs of bright-turquoise mold. He had struck a seam of heterogenite, an ore that can be refined into cobalt, one of the elements used in lithium-ion batteries. Among other things, cobalt keeps the batteries, which power everything from cell phones to electric cars, from catching fire. As global demand for lithium-ion batteries has grown, so has the price of cobalt. The man suspected that his discovery would make him wealthy-if he could get it out of the ground before others did…Southern Congo sits atop an estimated 3.4 million metric tons of cobalt, almost half the world's known supply. In recent decades, hundreds of thousands of Congolese have moved to the formerly remote area. Kolwezi now has more than half a million residents. Many Congolese have taken jobs at industrial mines in the region; others have become 'artisanal diggers,' or creuseurs. Some creuseurs secure permits to work freelance at officially licensed pits, but many more sneak onto the sites at night or dig their own holes and tunnels, risking cave-ins and other dangers in pursuit of buried treasure…The man took some samples to one of the mineral traders who had established themselves around Kolwezi. At the time, the road into the city was lined with corrugated-iron shacks, known as comptoirs, where traders bought cobalt or copper, which is also plentiful in the region. (In the rainy season, the earth occasionally turns green, as a result of the copper oxides beneath it.) Many of the traders were Chinese, Lebanese, and Indian expats, though a few Congolese had used their mining profits to set up shops…China and Congo have a long history. During Leopold's reign, Chinese workers were shipped to Congo to help build the national railroad. In the nineteen-seventies, Mobutu turned to Mao's regime for technical collaboration on infrastructure projects. By the nineties, the Chinese were becoming the bosses: the Beijing government and myriad Chinese businesses began making heavy investments in Africa, particularly in resource-rich and regulation-poor countries like the Democratic Republic of the Congo. Peter Zhou, a Chinese-born financier who has worked on a few mining deals in Congo, said that in such countries 'there is corruption, there is lack of the rule of law, which gives you more autonomy to be entrepreneurial.' (Zhou emphasized that he hadn't directly witnessed or engaged in corruption.) In 2007, Joseph Kabila made a six-billion-dollar infrastructure deal with China that included a provision allowing the Chinese to extract six hundred thousand tons of cobalt…These days, most of the cobalt in southern Congo comes from industrial mines, which are largely owned by Chinese companies. In 2016, China Molybdenum paid the U.S. company Freeport-McMoRan $2.65 billion for a controlling stake in Tenke Fungurume, a giant copper-and-cobalt mine about two hours east of Kolwezi; three years later, China Molybdenum acquired another stake, for $1.14 billion. Zhou, who worked on the Tenke Fungurume deal, divided the current Chinese involvement in Congo into two phases. At first, he said, companies had to take significant financial risks, because 'there was a lack of infrastructure-the cost base is high to transport all the materials.' They also had to pay bribes to government officials and Gécamines executives. During this phase, Chinese companies were incentivized to make money by whatever means possible. 'If you conduct your business without, you know, a proper return, then you can't justify the risk,' Zhou told me. During this period, he said, mines had few safety protections…With sufficient infrastructure in place, Zhou went on, the 'Chinese are now conducting business in a more moral way. They have to keep the people in a peaceful mind-set, so they started to build a social relationship-training locals in how to grow out their culture, their schools.' He continued, 'There's less gray conduct now, and more of a sort of transparent business.'…Huge sums of money continue to change hands in the region. In December, China Molybdenum paid Freeport-McMoRan half a billion dollars to acquire a controlling stake in Kisanfu, a copper-and-cobalt concession east of Kolwezi. At a recent conference sponsored by the Financial Times, Ivan Glasenberg, the C.E.O. of Glencore, said, 'China, Inc., has realized how important cobalt is.' He continued, 'They've gone and tied up the supply.' He warned that if Chinese companies stopped exporting batteries, this could hamper the ability of non-Chinese companies to produce electric vehicles.