Increased production of electric automobiles worldwide depends on supplies of cobalt from mines in the Democratic Republic of Congo. As sales of electric cars rise, the uncertainy of cobalt production in Congo with over 60 per cent of the world’s known reserves, is a major concern and may keep the cars’ cost beyond the reach of the mass market. First Cobalt mining company of Canada is exploring for cobalt in North America and another Canadian mining company recently cancelled its stake in supplying cobalt from Congo.
The lithium-ion battery in today’s electric cars carries 5 to 10 kilos of cobalt, with its cost accounting for 20 % of the cost of a Tesla Model S. 97 per cent of the world’s supply of cobalt comes from nickel and copper mining in Central Africa with Congo being by far the primary source. While Tesla and other companies are investing heavily in battery research which might bypass use of cobalt in the future, Tesla’s claim that in the meantime its cobalt needs will be met by North American mines is dubious. An article titled “No cobalt, no Tesla” in the journal Technology Crunch points out that Canada and the U.S. produce 4 % of the world’s cobalt, far short of what would be needed for manufacture of a half million Tesla Model 3 cars, the company’s stated short term goal.
Meanwhile, Congo’s political instability, the Western public’s heightened awareness of use of child labor in the country’s artisanal mines and corruption in the Congolese government-controlled mining have discouraged investment in Congolese cobalt production. In September, the Canadian First Cobalt Co. pulled out of an agreement to mine cobalt at seven different sites in Congo’s Katanga Province. According to the Creamer Media’s Mining Weekly , First Cobalt described the Congo sources as “very appealing geologically but its investment climate has deteriorated”. First Cobalt decided to concentrate its investments in Canada’s Cobalt Camp, where no cobalt has been produced to date. A UK analyst for a commodities trader in cobalt told Tom Wilson of the Sydney Morning Herald “The cobalt-supply dependency on the Congo is a risky situation”.
Chinese companies seem willing to take the risk. Today it is Chinese companies in Congo, Zambia and Central African Republic which supply 90 per cent of the cobalt used in lithium-ion batteries. Two Western companies holding a majority interest in Congo’s largest cobalt producing mine, the Tenke Fungurume mine, have sold their shares to two Chinese companies in what were the biggest investments ever in Congo. The head of the government mining company, Gecamines, Mr. Albert Yuma Mulimbi told London’s Financial Times he preferred partnerships with Chinese companies as past deals with the West often left Congo with a minority interest in the revenues.
For the near future, the Chinese will supply most of the refined cobalt for the electric car industry world-wide. They will not be the only ones to benefit from the “greening” of the automotive industry. Bloomberg New Energy Finance estimates that demand for cobalt could increase 47 times by 2030 with one analyst estimating that Congo’s share of the world’s cobalt production might need to reach 73 % by 2025. Cobalt prices on the London Metal Exchange have more than doubled this year. As a result, a month ago Kabila urged the Congo legislature to increase royalty payments on cobalt production from 2 to 3.5 per cent. Shortly before Kabila’s efforts, Standard & Poors Global lowered its rating of Congolese debt and currency, citing the political instability in the country.