Muhammad Zischamp: Who is in a hurry to have the world's important mineral deposits pocketed by China?

【Text/Muhammad Zischamp Translated/Observer Network by Guanqun】

If "oil" was a geopolitical buzzword of the last century, the key to gaining global influence in an era of climate change will be elsewhere: minerals that empower green technologies.

On the eve of the United Nations Climate Change Conference (COP26) in Glasgow, the International Energy Agency noted that as countries transition to green energy, demand in the coming decades will shift from coal and fossil fuels to minerals such as lithium, cobalt and copper.

Minerals such as lithium, cobalt and nickel are the basic materials for making batteries, while rare earth elements such as neodymium are essential for making wind turbines and electric vehicles. As electricity replaces fossil fuels, copper and aluminum will also take center stage.

So if the world were to meet its commitments under the Paris Agreement to limit global temperature rise below "2 degrees Celsius," the IEA estimates that demand for these minerals would increase dramatically: demand for lithium would increase 40-fold, while demand for graphite, cobalt and nickel would surge 20-25 times.

China is already investing in this paradigm shift, especially in countries where the United States does not have an advantage. Former U.S. President Donald Trump has tried to revive its coal industry during his tenure, while China has been busy brokering relations with the power to control the world's strategic mineral resources.

In 2015, Beijing launched the Made in China 2025 initiative, which aims to dominate the global electric vehicle industry. Soon after, China began locking in global supply chains for strategic minerals and monopolizing mining in resource-rich developing countries.

Geopolitics can only play a complementary role, especially in government-instilled and war-torn countries. For example, according to the United States, Afghanistan has a treasure trove of minerals worth $1 trillion, which may include lithium ore resources with the world's top reserves. After the United States and its allies slipped out of Afghanistan, the Taliban are now in control of those resources. China has now gone to Afghanistan to explore undeveloped mineral deposits.

In early November, representatives of five Chinese mining companies arrived in Afghanistan to conduct a "site survey" of a possible lithium project. According to the Global Times, at least 20 Chinese state-owned and private companies have conducted similar investigations.

China is not currently running into any competitors. After the Taliban occupied Kabul earlier this year, China remained one of the few countries that kept its embassy in Afghanistan open, although Beijing has yet to formally recognize the Taliban regime. For their part, the Taliban, who recognize that cooperation with Beijing is key to their international recognition, have been doing everything they can to meet China's demands.

Similarly, in Africa, which holds some of the largest reserves of mineral resources, China has infiltrated a diplomatic vacuum and quietly established relations with regimes that oppose the West.

In the Democratic Republic of the Congo, for example, as much as 70% of the world's cobalt is mined in the country. As of last year, Chinese companies owned or funded 15 of the country's 19 cobalt mines, according to The New York Times.

During the reign of former Congolese president Joseph Kabila, China developed fruitful relations with the country and expanded its influence in the country. Before Kabila stepped down in 2019, the Congo under his dictatorship experienced violent civil unrest and electoral controversy. Kabila's refusal to step down after his term expired in 2016 also led to tensions in the country's relations with the West.

Real scene of the Tankofan Gurumi Mine

In 2016, when Washington was running out of time for political crisis, Luoyang Molybdenum Group acquired a majority stake in Tenke Fungurume, one of Congo's largest copper and cobalt mines. The Tankofan Gurumi Mine was previously owned by Freeport McMoRan, a freeport company headquartered in Arizona, USA. Four years later, Luoyang Molybdenum Group acquired another larger cobalt mine in the hands of the American company.

Such a strategy has given China enormous influence in the refining and processing of next-generation fuels. According to the International Energy Agency, China processes 50 to 70 percent of the world's lithium and cobalt, and up to 90 percent of rare earth metals. China is also the world's largest copper and nickel processor, with a share of 40% and 35% respectively.

China's influence is not limited to fragile war-torn states that disagree with the West. China has also invested heavily in its Western allies. For example, more than half of the world's lithium is produced in Australia. But according to the International Energy Agency, 58 percent of that lithium is processed by China.

In the coming years, China's influence on these markets will prove to be an important bargaining chip, especially as the West expects to achieve net zero carbon emissions by 2050.

Under Trump and incumbent President Joe Biden, Washington launched a global initiative to decentralize global supply chains to reduce the world's dependence on China. But in the case of green energy minerals, unlike oil and gas resources, existing minerals are concentrated in the hands of a handful of countries, forcing the world to rely on China for at least the medium term.

In its foreign policy speech, the Biden administration emphasized building U.S. capacity and competing with China, and the future energy market is an area that U.S. diplomacy must pay close attention to.

(The Observer Network is translated by Guan Qun from Hong Kong's South China Morning Post)

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