Latest news with #Sicomines
The Hindu
3 days ago
- Business
- The Hindu
Africa is challenging China's mining hegemony
Over the past two decades, China has entrenched itself as a dominant actor in Africa's mining sector. But signs are mounting that the tide is beginning to turn. A new wave of resistance, driven by increased scrutiny from African governments as well as civil society activism, is starting to challenge China's long-standing dominance in Africa's mining industry. Chinese firms have often failed to deliver promised skills transfer or infrastructure. Consequently, African nations are growingly asserting their rights to value-added development. The old model of raw resource extraction in exchange for infrastructure or investments is no longer tenable in a region demanding agency, accountability, and economic sovereignty. No longer passive partners Africa is home to some of the world's richest reserves of critical minerals. The Democratic Republic of Congo (DRC) alone produces 80% of the world's cobalt, a mineral indispensable for rechargeable batteries. China controls around 80% of that output through long-standing agreements such as the Sino Congolaise des Mines (Sicomines) deal, which granted Chinese firms mining rights in exchange for infrastructure projects. However, the benefits to local Congolese have been disproportionate to the mineral wealth extracted. Congo's cobalt ban: Impact on global market explained According to the civil society coalition Congo Is Not for Sale (CNPAV), tax exemptions granted to Chinese companies cost the DRC approximately $132 million in 2024 alone. These losses have spurred public outrage, and citizens have called for a full review of the Sicomines deal. Further, since the payments are tied to market prices, there is a real risk that the country could receive little or no infrastructure investment during downturns. Faced with mounting criticism, the Congolese government was forced to renegotiate the existing contracts with China, especially in light of fluctuating copper prices. The DRC reportedly plans to increase its stake in a joint venture with Chinese firms Sinohydro and China Railway Group, raising its ownership from 32% to 70%. Last year, after Congo's state-owned miner, Gecamines, voiced its opposition, the sale of Trafigura-backed miner Chemaf Resources to China's Norin Mining was cancelled. In Namibia, China's Xinfeng Investments has been accused of acquiring its lithium mine through a bribe of N$ 50 million. Over the years, Xinfeng has exported thousands of tonnes of raw lithium ore to China but has not constructed the promised processing facilities. Workers at the company have also reported hazardous working conditions and substandard housing. In 2023, China's Zhejiang Huayou Cobalt invested $300 million to construct a lithium processing plant in Zimbabwe. Most benefits will likely flow back to China unless robust regulatory frameworks and local capacity-building initiatives are implemented. China's dominance has also triggered environmental and social concerns. In Hwange National Park in Zimbabwe, Chinese firm Sunny Yi Feng's application for coal mining permits has been blocked by environmental authorities. In Zambia, a catastrophic acid spill from a Chinese-owned copper mine contaminated a significant tributary of the Kafue River, one of the country's most critical water sources. In Cameroon, resistance is growing against the massive Lobé-Kribi Iron Ore Project led by Sinosteel Cam S.A., a subsidiary of China's Sinosteel Corporation. Local NGOs have warned that the project threatens ecosystems, public health, and cultural heritage. Many community members see the project as a fait accompli, pushed through without adequate consultation or benefit-sharing. Across Africa, Beijing's once-unquestioned mining dominance is now being scrutinised more closely, with a growing demand for fairer, more transparent partnerships. This signals a newfound assertiveness by African governments, who are no longer content to act as passive partners in resource exploitation. Policy changes Meanwhile, strategic policy changes are also occurring. In 2022, Zimbabwe banned the export of unprocessed lithium to force investors to build local processing plants. In 2023, Namibia implemented a similar export ban on unprocessed lithium and other critical minerals. These countries aim to retain more value from their mineral wealth by requiring local beneficiation. Similar stories are unfolding across the continent. Still, policy alone is not enough. These export bans must match broader economic strategies to ensure local participation in processing and transformation. Otherwise, they risk simply shifting exploitation from one form to another. African leaders must ensure that domestic processing leads to fundamental economic transformation, not just a new phase of elite capture. China may still be Africa's largest mining partner, but the future of its dominance is no longer guaranteed. Moreover, a clear shift is underway, where African nations are reasserting sovereignty over their natural resources. By challenging opaque contracts, enforcing environmental standards, and demanding value addition, they are redrawing the terms of engagement. If these trends continue, African countries are poised to reshape the global supply chain for minerals and their role within it, moving from exporters of raw materials to integral partners in the emerging green economy. This change would come at the expense of China's long-standing dominance in the African mining sector. Samir Bhattacharya, Associate Fellow, Observer Research Foundation
Yahoo
15-03-2025
- Business
- Yahoo
A battle is playing out over Congolese cobalt. China is well ahead
Donald Trump has been upending the world order since his return to the White House in January. In this three-part series, we look at the implications of Trump's foreign policy - starting with the competition between the US and China for critical minerals in the Democratic Republic of Congo. The tussle playing out between Beijing and Washington over the sourcing and processing of critical minerals might not have been so intense had the United States not sold two of the world's biggest cobalt mines to China. Both cobalt-copper mines are located in the Democratic Republic of Congo. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. American mining giant Freeport-McMoRan sold its stake in the Tenke Fungurume Mine to CMOC Group - then known as China Molybdenum - for US$2.65 billion in 2016. Four years later, it also offloaded its share of the Kisanfu mine to the Chinese miner for US$550 million. The two acquisitions more than doubled CMOC's cobalt supply and it became the world's largest producer of the mineral in terms of output in 2023. DR Congo, or the DRC, is by far the world's biggest source of cobalt - a mineral needed for making the batteries used in phones and electric vehicles - accounting for about 70 per cent of global production. It is also a key source of copper and a dozen other critical metals and rare earth minerals. US mining giant Freeport-McMoRan sold its stake in the Tenke Fungurume Mine to Chinese firm CMOC in 2016. Photo: Reuters alt=US mining giant Freeport-McMoRan sold its stake in the Tenke Fungurume Mine to Chinese firm CMOC in 2016. Photo: Reuters> That has drawn multibillion-dollar Chinese investments to the Central African nation as part of Beijing's Belt and Road Initiative. They include a US$7 billion Sicomines resource-for-infrastructure deal under which a consortium of Chinese firms, led by Sinohydro and China Railway Engineering Corporation, will build roads, power transmission lines and hydro dams. The Chinese firms are to be repaid in minerals or income generated from them. Chinese state-owned creditors approved 19 loan commitments worth about US$12.85 billion for cobalt-copper mines in DR Congo between 2000 and 2021, according to research published in February by AidData, a research lab at the College of William & Mary in the US. Political turmoil in the mineral-rich east of DR Congo has complicated the situation for investors, with militant groups led by M23 capturing Bukavu, capital of South Kivu, on February 14 after they took Goma, capital of North Kivu, the previous month. Last month, President Felix Tshisekedi offered the US direct access to strategic minerals if it intervened to end the conflict, according to a post on X by the president's spokeswoman, Tina Salama. On February 20, Washington imposed sanctions on a Rwandan government minister over his alleged support for the M23 armed group fighting in the east of DR Congo. According to a Financial Times report last week, the US is also engaged in "exploratory talks" with DR Congo on a deal that would see the African nation grant access to its critical minerals in exchange for military support. Observers say the Donald Trump administration might be able to leverage the situation in DR Congo to apply pressure on Kinshasa so that it does not approve new acquisitions by Chinese companies. But they note that Chinese investors have already firmly established a presence in the country. Congolese President Felix Tshisekedi wants the US to intervene to end the conflict. Photo: AP alt=Congolese President Felix Tshisekedi wants the US to intervene to end the conflict. Photo: AP> Christian-Geraud Neema, a Congolese mining and policy analyst and non-resident scholar with the Carnegie Africa Programme, said the "US doesn't offer a real, credible and viable alternative to the Chinese investments in the DRC". "The DRC wants an option but doesn't want to align to just one side," said Neema, the Africa editor of the China-Global South Project. He said Washington might want to stymie further Chinese investment in Congolese mines "but to kick the existing ones out just isn't feasible and that's not an option for the DRC". According to Neema, the US needs to put an offer on the table. "They have already cut USAID funding from which the DRC was receiving US$1 billion, but that is a broader move not targeted at the DRC specifically," said Neema, referring to Trump's move to dismantle the United States Agency for International Development. America's National Association of Manufacturers last year said the price of buying a company like Congolese cobalt miner Chemaf Resources - whose deal to sell its assets to Norin Mining has stalled - was significant. It said some investors were waiting for the US government to offer support before pursuing such a deal. "It has been difficult for the US government to interest American investors in any sector in Congo because of the country's poor infrastructure, limited skilled labour, resource nationalism and reputation for government corruption," the association said in a statement. Last month, the US House Committee on Foreign Affairs said critical mineral security was national security. It said if China increased its control over these supply chains it would be detrimental to both DR Congo and the US. "The DRC government must ensure that Norinco's bid remains blocked. Don't give the PRC another inch," the committee said in a post on X last month responding to Norinco's offer to buy copper and cobalt assets owned by Chemaf. But as demand for cobalt and other critical minerals skyrockets, there is wide bipartisan consensus in Washington on the US strategic interest in Africa - especially for gaining access to those minerals, and especially in DR Congo. The previous Joe Biden administration in 2022 signed a memorandum of understanding with DR Congo and Zambia - another resource-rich African nation - to provide funding and expertise for their mining industries. To help it gain access to minerals, the US is funding the building of its first megaproject in Africa in decades, the Lobito Corridor - a railway and logistics project connecting Angola with Zambia and DR Congo. The project is expected to help the US and its allies secure critical and strategic minerals that are central to their green-energy plans. However, it is not clear whether the Trump administration will back the project given the freeze on US foreign assistance. DR Congo produces about 70 per cent of the global supply of cobalt. Photo: AFP alt=DR Congo produces about 70 per cent of the global supply of cobalt. Photo: AFP> Kai Xue, a Beijing-based corporate lawyer who advises on foreign direct investment and cross-border financing, said given DR Congo's position as the world's primary cobalt supplier, "the Trump administration will likely continue to view the DRC as a strategic battleground". Xue noted that the Biden administration had intervened to pressure DR Congo into blocking a Chinese state-owned entity's acquisition of a cobalt and copper miner in 2024 - referring to the stalled Chemaf deal with Norin Mining, a unit of defence giant China North Industries Corporation. The Wall Street Journal reported last year that Washington had also initiated discussions with a number of American companies to buy Chemaf. Meanwhile, there is concern in Beijing that its belt and road infrastructure and investment strategy will become more of a US target after the Trump administration pressured Panama to quit the initiative - something it could repeat in other places where Washington wants to counter Chinese influence. In response, China's assistant foreign minister Zhao Zhiyuan accused the US of "wantonly undermining China-Panama relations and smearing and sabotaging belt and road cooperation through the means of pressuring and threatening". Chris Berry, who heads US-based commodities advisory firm House Mountain Partners, said while Trump wanted to "bring industries home" it was unclear how he intended to do so, aside from the use of tariffs. And he did not see any change to the dynamic in DR Congo. "Chinese companies are so entrenched in the DRC that I'm not sure what leverage the US or other Western nations have in the country currently to shift this dynamic in the near term," Berry said. He noted that there had been progress on the Lobito Corridor but the freeze on US aid put the timing and pace of the project in question - opening the door for Chinese interests to strengthen their supply chains and invest more in the country. Seifudein Adem, a global affairs expert and research fellow at the JICA Ogata Research Institute for Peace and Development in Tokyo, said China had every reason to be concerned about Trump's next move in DR Congo given his transactional approach to foreign policy. Adem said competition between the US and China for critical raw materials in DR Congo was likely to intensify. "As we have seen in the opening weeks of the Trump administration in connection with some other countries - including America's own allies - for him what is good for America, however he defines it, is good for the world," Adem said. "That may be his global expectation." According to Neema, "US companies might be a bit more interested to go back to the DRC" after Trump halted enforcement of an anti-corruption law - the Foreign Corrupt Practices Act - that bars Americans from bribing foreign government officials to win business. Trump said "overenforcement" of the law put US businesses at a disadvantage in international markets. DR Congo is poorly ranked at 163 out of 180 countries on Transparency International's Corruption Perceptions Index for 2024. Cobalt is needed to make the batteries used in electric vehicles and phones. Photo: TNS alt=Cobalt is needed to make the batteries used in electric vehicles and phones. Photo: TNS> But as far as critical minerals are concerned, China has "a virtual monopoly on copper and cobalt production", according to Joseph Cihunda, from the University of Kinshasa's law faculty. Noting that there were no American mining companies operating in DR Congo at present, he said Chinese had also invested in the country's lithium, diamonds, gold and 3T ores - tin, tungsten and tantalum. Cihunda, who is also a project officer at the Congolese office of Southern Africa Resource Watch, said he did not see how the US could catch up with China on critical minerals investment in the country. "Pressure on the Congolese government, or in the worst case, changing it, won't be enough given that Congolese public opinion considers the US to be the one pulling the strings in all the murderous wars the DRC has experienced since 1996," he said. This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.
