Fortune Minerals : COBALT NEWS

South China Morning Post - Online - November 30, 2021

China's growing control of global minerals supply leaves the US in the dust

With Washington distracted by political crisis at home, Beijing has steadily invested in the inevitable shift away from fossil fuels towards green energy…China's control of key minerals such as lithium and cobalt leaves the world with little option but to depend on it for at least the medium term...If oil was the buzzword of geopolitics in the previous century, the key to global influence in an era of climate change will lie elsewhere: minerals that power green technology…In the run-up to the recent UN Climate Change Conference (COP26) in Glasgow, the International Energy Agency pointed out that demand will shift from coal and fossil fuels to minerals such as lithium, cobalt and copper in the coming decades, as countries transition to green energy…Minerals such as lithium, cobalt and nickel are integral to the construction of batteries, while rare earth elements such as neodymium are crucial to wind turbines and electric vehicles. As electricity replaces fossil fuels, copper and aluminium will take centre stage as well…China is already investing towards this paradigm shift, particularly in parts of the world where the US is now at a disadvantage. While former US president Donald Trump spent his term in office trying to revive the domestic coal industry, China was busy building ties with power brokers that controlled strategic mineral reserves around the world…In 2015, Beijing rolled out the Made in China 2025 initiative, which includes a goal to dominate the global electric vehicle industry. Soon after, China began securing global supply lines for strategic minerals and cornered the mining industry across the resource-rich developing world…Geopolitics has only served to help, especially in more dysfunctional, war-torn countries. Afghanistan, for instance, sits on a treasure trove of minerals worth US$1 trillion according to the US, including possibly one of the world's largest lithium reserves. The Taliban are now in control of those reserves after the US and its allies exited ignominiously. China is already out there, exploring potential mines…Similarly, in Africa - home to some of the world's biggest mineral reserves - China has inserted itself into diplomatic vacuums and quietly built ties with regimes that have been at loggerheads with the West for years…Take the Democratic Republic of the Congo, for example. A staggering 70 per cent of the world's cobalt is mined in the country. As of last year, Chinese companies owned or financed 15 of the 19 cobalt mines there, according to a New York Times report…In 2016, while Washington was distracted by political crisis, China Molybdenum acquired majority stakes in one of the country's largest copper and cobalt mines, Tenke Fungurume, previously owned by the Arizona-based Freeport-McMoRan. Four years later, the same Chinese firm acquired yet another, even more impressive, cobalt reserve from the same American firm…Such manoeuvres have now given China outsize influence in the refining and processing of the next generation of fuels. According to the International Energy Agency, China processes 50-70 per cent of the world's lithium and cobalt, and as much as 90 per cent of its rare earth metals. China is also the largest processor of copper and nickel, with shares of 40 per cent and 35 per cent respectively…China's influence isn't simply restricted to war-torn, fragile states that are at odds with the West; it has made significant investments in countries that are allies of the West, too. Over half of the world's lithium, for instance, is produced in Australia. But 58 per cent of it is processed by China, according to IEA data…China's clout in these markets will prove to be a significant bargaining chip in the years ahead, especially as the West looks to move towards net-zero carbon emissions by 2050…Under Trump and current President Joe Biden, Washington has led global discourse on diversifying global supply chains to reduce dependence on China. But, as far as green energy minerals are concerned, existing mines are far more concentrated in a few countries than is the case for oil and gas reserves - leaving the world with little option but to depend on China for at least the medium term.