COVID-19 Closures in DRC Could Disrupt Chinese Metals Mining; Key Component of China’s Lucrative Batteries Industry
On March 23, the government of the Democratic Republic of Congo (DRC) implemented a temporary lockdown in the country’s southern Haut-Katanga province over concerns of a severe coronavirus outbreak. The closure of the province is expected to cause major disruptions in the international supply chain of raw materials such as cobalt, copper, and lithium, which are crucial to China’s high-tech industries. The longevity of the lockdown was initially unclear, however, subsequent reports of broader shutdowns in the country will likely have long-term implications for cobalt trade networks. The Jack Ma Foundation has donated medical supplies to the DRC in an attempt to contain the spread of the virus.
Cobalt, in particular, is a major driver of China’s emerging dominance in the battery production industry and the DRC has 70% of the world’s supply. Cobalt is used for energy storage and remains critical to the development of battery-powered vehicles in China. Chinese firms control approximately seven of the DRC’s largest mines, led by China Molybdenum Co. Ltd., and other mines in the region also primarily supply to Chinese cobalt refiners, which purchase approximately 80% of the world’s battery-ready high-grade cobalt. Zijin Mining Group Ltd., Chengtun Mining Group Co. Ltd., JCHX Mining Management Co. Ltd., Zhejiang Huayou Cobalt Co. Ltd. are among other active Chinese companies in DRC’s cobalt mining sector, which has come under persistent scrutiny over its use of child labor, poor safety standards, and other exploitative practices.
The temporary lack of access is likely to cause the price of cobalt—and the price of products, like batteries, that use cobalt—to increase, although these additional revenues are likely to go to China rather than to the DRC.