There’s a lot of talk these days in Washington policy circles about the urgent need for the United States to “de-risk” or “de-couple” itself from Chinese supply chains needed to manufacture batteries required to power the green mobility revolution.
A lot of that rhetoric is stipulated in the landmark Inflation Reduction Act (IRA) legislation that penalizes companies that sell vehicles with critical resources mined and/or processed by Chinese entities.
But so far, most of the language in the IRA and that Beltway rhetoric has been de-coupled from reality given that no one seems to have a credible answer for how the U.S. plans to close the 10+ year head start that China has in mining and processing strategic resources like cobalt.
In certain verticals including cobalt, graphic and rare earths, China maintains massive double-digit advantages that will take a Manhattan Project-scale undertaking if the U.S. wants to close the gap.
But now with cobalt, we’re about to see if the U.S. is up to the challenge.
A fascinating side-by-side comparison of U.S. and Chinese cobalt initiatives is going to unfold in the DR Congo over the next 12 months that will give us the clearest indication to date if the U.S. is really serious about chipping away at China’s dominance in this strategically vital sector.
On the Chinese side, now that mining giant China Molybdenum (CMOC) has settled its year-long feud with Congo’s state-run mining company Gécamines, watch for CMOC to accelerate plans to refine more of its output locally.
Although we don’t know the precise terms of the settlement, we know that CATL, the world’s largest EV battery maker, took a 25% stake in CMOC last year and the two companies have been in regular talks with Congolese officials about building new refining capacity in the country.
Every Congolese mining analyst we’ve spoken to in recent weeks believes this is going to happen, possibly within the next few months.
Then on the U.S. side, Secretary of State Antony Blinken oversaw a signing ceremony last December for an MoU with both Zambia and the DR Congo to “develop an electric battery supply chain.”
It’s been four months since that non-binding MoU was signed and the only news we’ve heard is that two Congolese ministers visited the State Department this month to plead with Under Secretary of State José Fernandez to get the project going with a pre-feasibility study.
As far as we know, both ministers left that meeting with lots of promises but no tangible commitments.
To be sure, this isn’t going to be an easy challenge for either major power, as building anything in a country as dysfunctional as the DRC is today is unbelievably difficult and time consuming. But at least it’s a start and we’ll be able to see if the U.S. is up to the task.
