Beijing’s stronghold over the Democratic Republic of Congo’s (DRC) mineral resources poses challenges for Washington’s strategy to mitigate reliance on China for critical minerals, according to a recent analysis from Benchmark Mineral Intelligence.
The report highlights that Chinese companies control two-thirds of the DRC’s cobalt, a key component for electric vehicle batteries, accounting for approximately 74% of global output. This heavy Chinese presence places the DRC’s cobalt supply at “high risk” of being affected by the foreign entity clause in the U.S. Inflation Reduction Act (IRA).
CMOC, formerly China Molybdenum, is a leading cobalt producer in the DRC, particularly from its Tenke Fungurume mine and Kisanfu project, both of which may fall under the IRA’s scrutiny.
Benchmark’s analysis indicates that 60% of the global cobalt supply in 2024 is likely to come from assets categorized as foreign entities of concern (FEOC) or at high risk of such classification. This includes entities linked to countries like China, Russia, Iran, and North Korea. Moreover, 79% of refined cobalt supplies are expected to originate from FEOC-related assets.
“The majority of DRC volumes fall under the ‘high risk’ category due to significant Chinese ownership, making them likely ineligible for consumer tax credits under the IRA,” said Will Talbot, research manager at Benchmark.
In response, the DRC’s President Felix Tshisekedi has sought to renegotiate previous minerals-for-infrastructure agreements with China to ensure local benefits from mineral wealth. His 2023 visit to China resulted in a revised agreement for the Sicomines copper and cobalt joint venture, with up to $7 billion in investments for infrastructure.
Chinese firms have significantly expanded their foothold in the DRC’s mining sector over the past decade, especially as Western companies divested their interests. Notably, U.S.-based Freeport-McMoran sold major cobalt assets to CMOC in 2016 and 2020, more than doubling CMOC’s cobalt supply and positioning it as the world’s largest cobalt producer by output.
Washington’s initiatives aim to challenge this dominance and diversify cobalt sources. The U.S. signed a memorandum of understanding with Zambia and the DRC in 2022 to enhance their mining industries, and it is investing billions to revitalize the Lobito railway corridor, which would improve connectivity for transcontinental trade.
Experts note that while the U.S. aims to reduce reliance on DRC-sourced cobalt, it will likely remain dependent on these high-grade resources in the near future. Chris Berry from House Mountain Partners emphasized that building a sustainable supply chain will take time and that the U.S. must navigate the complexities of global metal prices.
Additionally, the U.S. government has reportedly intervened in transactions involving Chinese firms, such as blocking Norin Mining’s acquisition of Chemaf Resources and supporting Mercuria’s bid for copper-cobalt mines from Eurasian Resources Group.
Carlos Lopes, a professor at the University of Cape Town, argues that Washington’s strategy signals a broader geopolitical rivalry, potentially sidelining the DRC’s long-term development needs. He cautioned that U.S. investments should focus not just on securing supply chains but also on fostering local economies and industries.
To ensure mutual benefits, Lopes suggests that initiatives should include investments in value-added industries and infrastructure, rather than merely reinforcing the DRC’s role as a raw materials supplier for external interests.
