For decades, the world has known that the Democratic Republic of Congo has immense natural resources which make even the wealthiest nations green with envy.
If well utilized, these resources could transform the nation from the poor and chaotic country we know today to a leading light in the global economy.
The DRC’s untapped deposits of copper, gold, diamonds, cobalt, uranium and coltan are some of the raw minerals estimated to be worth more than US$ 24 trillion. This makes it the richest country in the world due to its natural resources.
While these minerals are beneath the ground, the country has limitless water from the Congo River which is the world’s second-largest river in addition to a benign climate and rich fertile soil. Despite all these endowments, the country’s ranking on the UN Human Development Index is consistently rated lowest.
This is the irony.
The country in the Central African region has been roiling in the world’s bloodiest conflict since World War II. The war has left more than five million people dead with millions more driven to the brink of death by starvation and disease.
Millions of women and girls have been raped adding on to the pain of the nation.
However, with the tanking oil prices, investors are growing warier of the future of the oil industry due to the fluctuations occasioned by various factors with the latest being the covid-19 coronavirus pandemic. The disruption by the pandemic has seen the world’s economies grind almost to a halt with the oil industry suffering the biggest hit.
For the first time in history, oil prices plunged into negative territory in April 2020 meaning that oil sellers were paying buyers (those with storage) to take the oil off their hands. With this history-making event, the answer to powering the world’s economies has been forced to shift with projections showing that the demand for raw materials for electric car batteries will rise further.
And herein lies the blessing for the DRC as a leading producer of the raw materials needed for electric cars.
A report by the UNCTAD on strategic battery raw materials shows that with 23 million passenger vehicles expected to be produced by 2030, there is a surging need driven by the boom in electric cars.
The demand for raw materials used to manufacture rechargeable batteries will grow rapidly as the importance of oil as a source of energy recedes, as highlighted recently by the collapse of prices due to oversupply and weak demand resulting from the pandemic, according to the UNCTAD report.
The report, Commodities at a glance: Special issue on strategic battery raw materials, documents the growing importance of electric mobility and the main materials used to make rechargeable car batteries.
Ongoing efforts to lower greenhouse gas emissions are also expected to spur further investment in green energy production with estimates of around US$600 billion per year on average.
“Alternative sources of energy such as electric batteries will become even more important as investors grow more wary of the future of the oil industry,” UNCTAD’s director of international trade, Pamela Coke-Hamilton says.
Electric car sales have boomed in recent years, rising 65 per cent in 2018 from the previous year to 5.1 million vehicles. This number is expected to reach 23 million in 2030, according to the International Energy Agency (IEA).
Rechargeable batteries will play a significant role in the global transition to a low-carbon energy system and help mitigate greenhouse gas emissions if the raw materials used in their manufacture are sourced and produced in a sustainable manner, the report says.
The worldwide market for cathode for lithium-ion battery, the most common rechargeable car battery, was estimated at US$7 billion in 2018 and is expected to reach US$58.8 billion by 2024, according to the report.
“The rise in demand for the strategic raw materials used to manufacture electric car batteries will open more trade opportunities for the countries that supply these materials. It’s important for these countries to develop their capacity to move up the value chain,” Coke-Hamilton said.
Few countries, vast raw materials
The DRC is among the few countries controlling large reserves of these raw materials needed for car batteries production.
Nearly 50 per cent of the world’s cobalt reserves are in the DRC. Chile controls 58 per cent of lithium reserves while 80 per cent of natural graphite reserves are in China, Brazil and Turkey. In addition, 75 per cent of manganese reserves are in Australia, Brazil, South Africa and Ukraine.
With the DRC in such a vantage position to provide this critical raw material, the country has to ensure that there is no disruption to its extractives industry if it is to benefit from the demand. Globally, any supply disruptions may lead to tighter markets, higher prices and increased costs of car batteries, affecting the global transition to low-carbon electric mobility.
According to the report, investing more in green technologies that depend less on critical battery raw materials could help reduce consumers’ vulnerability to supply shortfalls in the current mix of materials such as lithium and cobalt, but this would cut the revenues of the countries producing them.
Noteworthy is that the bulk of value-added to raw materials used in making rechargeable batteries is generated outside the countries that produce the materials.
For instance, value-added to cobalt ores by the DRC is limited to intermediate products or concentrates. Further processing and refining are mostly done in refineries in Belgium, China, Finland, Norway and Zambia to obtain the end products used in rechargeable batteries as well as for other applications.
The DRC, which accounts for over two-thirds of global cobalt production, has not maximized the economic benefits of the mineral due to limited infrastructure, technology, logistical capacity, financing and lack of appropriate policies to encourage local value addition.
Manufacturing positive electrodes for car batteries is dominated by countries in Asia with, China accounting for approximately 39 per cent of the global market, Japan (19 per cent) and the Republic of Korea 7 (per cent) in 2015.
To make sure that the social and environmental impacts do not stain production of these raw materials, source countries should address child labour and human rights abuses which abound in such activities.
Recycling should also be part of the production process to reduce adverse environmental impacts.