?? The DRC is Africa's Saudi Arabia

Cobalt is essential for EV batteries and the DRC contains 50% of the world's reserves and is responsible for 70% of global production.

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The Democratic Republic of the Congo (“DRC” or “Congo”) is by some measures the wealthiest country in the world, sitting atop mind-boggling mineral wealth estimated to be worth tens of trillions of dollars. It has no shortage of arable land, and the Congo River could be made fully navigable and has magnificent hydroelectric potential. Yet, the country remains mired in poverty with most living on less than $2 per day. Only 26% have access to clean drinking water and 9% to electricity.

The Congo will continue to receive more and more attention because the battery revolution being fomented by the West can not occur without this troubled country’s cobalt. Period, full stop, end of story.

Let’s take a look.

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Cobalt & Lithium-Ion Batteries

The DRC contains 50% of the world’s cobalt reserves and is responsible for 70% of global production. No other country comes close to the Congo in terms of reserves or production potential. Cobalt is generally joined in trace amounts with other metals, usually nickel and copper, and results as a by-product of processing those other minerals. Not so in the Congo where highly concentrated cobalt is uniquely found in sufficient scale making focused extraction economically feasible.

In the 1970s, Exxon (yes, that Exon) first released lithium-ion battery technology in response to energy shortages from the Jimmy Carter oil embargos. Some time later, in the 1990s, Sony first mass-produced lithium-ion batteries to power its small consumer electronics. Cobalt supply shocks really began in 2007 when Steve Jobs announced the Apple iPhone. Billions of smartphones have been sold since, each with batteries requiring a few grams of refined cobalt. Tablets upped the ante requiring 30 grams of cobalt. Laptops required more, e-bikes even more, and now we arrive to the King Kong of cobalt users: electronic vehicle batteries.

Brace yourself, and if possible find a chair and take a seat. Are you sitting? Good! The average electronic vehicle battery contains one thousand times more cobalt than a typical smartphone battery. The ambitious (delusional?) 30@30 campaign goal is that by 2030 there will be 230 million EVs on the road, representing 30% of total automobile demand. To meet that demand, cobalt production needs to increase fourteen times from 2021 levels.

Without cobalt in cathodes, EV batteries are unstable and prone to catch fire. They charge too slowly, require frequent replacing, and have low energy densities resulting in shorter driving ranges.

Congo’s Katanga and Geopolitics

The Congo has a death grip on the world’s cobalt reserves and production. What’s more, the bulk of the cobalt within the country is relegated to a small patch of land in the southeastern part of the Congo along the famous Copperbelt shared with Zambia. The region is the Katanga, which happens to also be packed to the gills with copper, iron, zinc, tin, nickel, manganese, germanium, tantalum, tungsten, uranium, gold, silver and lithium.

Conflict is a constant in the mineral-rich parts in the east of the DRC. It’s not clear exactly why the fighting continues, but there are several themes animating the violence, mostly having to do with territorial disputes with the neighboring countries of Burundi, Rwanda and Uganda. The rebel groups are thought to be funded in part by illegal mineral traders who benefit from the calamity.

In 2021, the six largest battery manufacturers in the world made 86% of all lithium-ion rechargeable batteries. These manufacturers are located in China (CATL & BYD), South Korea (LG, Samsung, SK Innovation), and Japan (Panasonic). China’s CATL dominates and has a one-third global market share. Most of the cobalt in these batteries comes from the Congo. The dirty work is largely carried out by Chinese miners and buyers of extracting cobalt from the toxic pits in the DRC for insertion into consumer goods purchased in faraway shiny and airconditioned showrooms.

America is making moves to disrupt the rear naked chokehold Chinese miners and buyers have on the Congo’s cobalt. In coordination with the EU, a railway costing upwards of $1 billion is planned to run from Angola’s port through the mineral rich portions of the DRC into Zambia. Presently, industrial cobalt is mined in one of nineteen mining complexes in the DRC and fifteen of those are owned or financed by Chinese mining companies. The semi refined cobalt is driven to seaports in Dar es Salaam (Tanzania) and Durban (South Africa) to commercial grade refiners, most of which are in China. In 2021, China produced 75% of the world’s refined cobalt, its largest refiner having a global market share of 22%.

Artisanal mining is a very “cute” way of describing a form of mining which extracts 30% to 40% of the DRC’s cobalt. The word “artisanal” makes it all sound glamorous, quaint, and something you yourself might enjoy doing while sipping tea and having crumpets. The reality is different from the imagery evoked. Artisanal cobalt miners in the DRC are paid paltry wages, on a piece-rate basis, and assume all risks of injury and death with no recourse for mistreatment.

There is no such thing as a clean supply chain of DRC cobalt. The “dirty” cobalt dug out by hand, often attached to a child, is washed into the industrially produced cobalt by way of buying houses and depots surrounding mining pits. Tracing the cobalt used in batteries to its precise source is nearly impossible and accountability vanishes like the morning mist when any amount of scrutiny is applied.

Cobalt Alternatives

In a related Emerging Real Estate Digest LinkedIn discussion, we asked, “[w]ill we innovate our way out of this situation? Be forced to learn to live with less material items? Or simply kill and abuse each other so that the strongest continue to receive the latest iPhones?”

Alternatives to consider:

(1) Mine More Cobalt in the DRC. Congo is aflame in conflict, washed with corruption, and mired in poverty. Large scale mining does occur but is very difficult to get going and maintain. The American and EU train connecting the minerals to Angola’s port will help encourage investment, but we are years away from this becoming a reality, if ever. Will the battery revolutionaries pause their enthusiasm long enough for the DRC’s institutions to mature?

(2) Recycle EV Batteries.?Recycling technologies for EV batteries are inefficient and expensive. Some facilities charge as much as $7,000 to recycle just one battery. Surely, this technology will improve and in the future help reduce reliance on freshly mined cobalt (and nickel and lithium).

(3) Use Less Cobalt.?Nickel can replace some of the cobalt used in cathodes, but the less cobalt utilized, the more unstable the battery and the shorter the driving distance. EV adoption requires those two metrics, safety and energy density, to improve, not retreat. Nickel has challenges and the vast majority is presently mined out of Indonesia, a country marked by corruption and extremely close ties to China.

(4) Battery Technology Advancements. Battery researchers are working on technologies to reduce or remove reliance on cobalt in batteries. Solid state batteries offer perhaps the shortest path to finding an alternative to rechargeable lithium-ion batteries, but costs are an issue, and mass production is at least one decade away.

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