Global Power Struggle Over Cobalt
A familiar story of greed and exploitation rattles the clean energy revolution.
KISANFU, Congo — Just up a red dirt road, across an expanse of tall, dew-soaked weeds, bulldozers are hollowing out a new canyon that is central to the world’s urgent race against global warming.
For more than a decade, this untouched land was controlled by an American company. Now a Chinese mining conglomerate has bought it and is racing to retrieve its buried treasure: millions of tons of cobalt.
At 73, Kyahile Mangi has lived here long enough to predict the path ahead. Once the blasting starts, the walls of mud-brick homes will crack. Chemicals will seep into the river where women do laundry and dishes. Soon a manager from the mine will announce that everyone needs to be relocated.
“We know our ground is rich,” said Mr. Mangi, a village chief who also knows residents will share little of the mine’s wealth.
This stretch of southeast Congo, called Kisanfu, holds one of the largest and purest untapped reserves of cobalt in the world.
The metal, extracted from copper deposits, has historically been of secondary interest to miners. But demand is set to explode worldwide because it is used in electric car batteries, helping them run longer without a charge.
But the quest for Congo’s cobalt has demonstrated how the green revolution, meant to save the planet from perilously warming temperatures, is caught in a familiar cycle of exploitation, greed and gamesmanship.
A rivalry between China and the United States could have far-reaching implications for the shared goal of safeguarding the earth. Here in Congo, China is so far winning that contest, as a company backed by the Chinese government bought two of the country’s largest cobalt deposits over the past five years.
Recently, President Joseph R. Biden Jr. acknowledged the United States had lost some ground. “We risked losing our edge as a nation, and China and the rest of the world are catching up,” he said.
China Molybdenum, the new owner of the Kisanfu site since late last year, bought it from Freeport-McMoRan, an American mining giant that five years ago was one of the largest producers of cobalt in Congo.
In June, the Biden administration warned that China might use its growing dominance of cobalt to disrupt the American push toward electric vehicles by squeezing out U.S. manufacturers. In response, the United States is pressing for access to cobalt supplies from allies, including Australia and Canada, according to a
national security official.
American automakers buy cobalt battery components from suppliers that depend in part on Chinese-owned mines in Congo. A Tesla longer-range vehicle requires about five kilograms of cobalt.
As of last year, 15 of the 19 cobalt-producing mines in Congo were owned or financed by Chinese companies, according to a data analysis by The New York Times and Benchmark Mineral Intelligence.
These Chinese companies have received at least $12 billion in loans and other financing from state-backed institutions. In fact, the five biggest Chinese mining companies in Congo had lines of credit from state-backed banks that totaled $124 billion, according to the data.
China Molybdenum’s first major purchase came in 2016, when it took control of Tenke Fungurume, a mine that on its own produces twice as much cobalt as any other country in the world. At least $1.59 billion of the $2.65 billion Tenke Fungurume price tag, financial records show, came from loans provided by Chinese state-owned banks.
At the same time, Congolese officials are pushing back, carrying out a review of past mining contracts, work they are doing with help from America. In August, Congo’s president, Felix Tshisekedi, named a commission to investigate allegations that China Molybdenum might have cheated the Congolese government out of billions of dollars in royalty payments.
Separately, at least a dozen employees or contractors at the Tenke Fungurume mine told The Times that Chinese ownership had led to a drastic decline in safety and an increase in injuries. Vincent Zhou, a spokesperson for China Molybdenum, rejected the claims.
A Presidential Connection
African countries for years have been turning to China for help building infrastructure with loans or trades involving their natural resources, following a plan laid out in 2005, when Joseph Kabila went to Beijing. Mr. Kabila, the new president of Congo after the assassination of his father, wanted to enlist the help of President Hu Jintao of China in turning around Congo’s economy.
The United States, locked in wars in Afghanistan and Iraq, had become uninterested in the country. Congo’s poor record on graft and human rights was also a concern.
Mr. Kabila’s wish list was long: He wanted new roads, schools and hospitals. In exchange, he was prepared to offer up his country’s vast mineral wealth. The two presidents outlined a deal that would change central Africa’s balance of power, according to André Kapanga, a former adviser to Mr. Kabila.
Mr. Hu said China’s western provinces were mired in poverty. Developing the area was essential, he said, and he needed minerals and metals for new industries. Congo was ready to help, Mr. Kabila assured him.
A diplomatic drama would play out in the capital of Kinshasa before it was sealed. The setting was Mr. Kabila’s inauguration in 2006. The Bush administration sent a delegation led by Elaine Chao, then the secretary of labor.
At a meeting the next day, the U.S. delegation congratulated Mr. Kabila on his democratic victory and listened as he talked about wanting to expand access to electricity across the nation. The meeting was mostly small talk.
But a similar meeting between the new president and Chinese officials played out differently, according to Mr. Kapanga, who was briefed on both discussions. The Chinese used the opportunity to begin formal talks with Mr. Kabila that would result in a $6 billion agreement: China would pay for roads, hospitals, rail lines, schools and projects to expand electricity, all in exchange for access to 10 million tons of copper and more than 600,000 tons of cobalt.
Attracting a Phoenix
By 2015, China’s presence in Congo had become visible in some projects: soccer stadiums, roadways and water treatment facilities. That year, the state-owned China Nonferrous Metal Mining Group said it would join with Congo’s state mining company, Gécamines, to develop the Deziwa site, then one of the country’s largest copper and cobalt sites.
In 2017, Zijin Mining, a Chinese state-backed company, raised almost $700 million from a sale of private shares to develop its Kolwezi mine. Corporate filings and bond prospectuses, examined by The Times, show that the five biggest Chinese companies in Congo had been given at least $124 billion in credit lines for their global operations.
The biggest deal came in April 2016, when China Molybdenum, a company whose biggest shareholders are a government-owned company and a billionaire, made its $2.65 billion offer to buy Tenke Fungurume, an American-owned mine atop one of the biggest cobalt reserves in the world.
There was one complication. Freeport-McMoRan had a Canadian partner that had the right of first offer to buy its stake. China Molybdenum’s solution was to have a Shanghai-based private equity firm buy out the partner, but even that deal relied on money from the Chinese government. None of the $1.14 billion raised to buy the partner’s share came from private investors, company filings show. Instead, it came from Chinese state-controlled entities.
The board of the private equity firm, BHR, was dominated by Chinese members but also included three Americans: Devon Archer, a businessman later convicted of defrauding the Oglala Sioux tribe in the U.S.; James Bulger, son of the former president of the Massachusetts state Senate; and Hunter Biden, whose father was vice president at the time.
It is not clear if Hunter Biden, who had helped found the firm in 2013, was involved in the deal. He did not respond to requests for comment. A former member of the BHR board, who was not authorized to speak, said that none of the Americans had played a role and that the fees generated for the work had not been distributed to Hunter Biden or others. A spokesperson for President Biden said he had not been made aware of his son’s connection to the sale.
Within a few years, Chinese officials would help orchestrate China Molybdenum’s purchase of Kisanfu from the same American mining giant. Together the sales marked a changing of the guard in Congo as the United States abandoned its mining interests — a problem that now weighs on President Biden as he and his aides have come to realize the extent of China’s dominance in clean energy.
Congo “has a vast territory, rich natural resources and great investment potential,” Wang Tongqing, a Chinese official, said at an event in Kinshasa in 2017. “A Chinese proverb says, ‘Build a beautiful nest to attract the phoenix.’ ”
Dangerous Mine Work
After the Chinese took over, employees at Tenke Fungurume were concerned that the mine was becoming more dangerous, according to interviews with workers, safety inspectors, Congolese officials and mining executives.
Workers climbed into acid tanks to conduct repairs without checking the air quality. Others drove bulldozers and other heavy equipment without training or did dangerous welding jobs without proper oversight.
All of it was an extreme departure from the company’s American predecessor, which had “zero tolerance” for risky activities and safety violations, according to current and former employees, managers and contractors.
When safety inspectors discovered violations after China Molybdenum took over, they were sometimes told to overlook them or offered bribes to do so, workers and supervisors said. And when they did try to enforce the rules, violence sometimes followed.
Problems at Tenke Fungurume are not just limited to employees’ complaints inside the mine.
Freeport-McMoRan had struggled with trespassers who carted off bags of cobalt. With China Molybdenum in charge, the conflict became much worse. The company, faced with thousands of newly arriving trespassers, asked the government to send soldiers to help control the situation, one executive who worked at the mine back then told The Times.
The military arrived and began patrolling Tenke Fungurume and other local mines. The situation turned deadly. A soldier at Tenke Fungurume opened fire, killing an unauthorized digger, according to an employee who told The Times he had witnessed the encounter.
Riots then erupted in the man’s home village. In the melee, a protester was shot dead, according to three local officials and the mine employee. China Molybdenum paid for the burials, they said.
The Rush to Expand
China Molybdenum is steadily increasing its output. Last December, it bought Kisanfu, paying Freeport-McMoRan $550 million. The ground underneath the site contains enough cobalt, according to China Molybdenum’s estimates, to power hundreds of millions of long-range Teslas.
And then in August, China Molybdenum announced plans to spend $2.5 billion at Tenke Fungurume to double production over the next two years. When the expansion is complete, the mine will produce nearly 40,000 tons a year. Last year, the United States produced just 600 tons.
This rush to expand, however, has drawn scrutiny, reaching all the way to Mr. Tshisekedi, the Congolese president.
Chinese government officials insist that the relationship is still on track and that the benefits to Congo are substantial.
Mr. Tshisekedi said his focus was not on which foreign power would dominate mining in Congo, but on how his country could share in the wealth generated by the green effort.
“We have an amazing potential for renewable energy, be it through our strategic metals or through our rivers,” he said, referring to both mining and hydroelectric power. “Our idea is, how can we put this amazing resource at the disposal of the world, but while making sure that it first benefits Congolese and it benefits Africans?”