COBALT NEWS

Unknown - November 21, 2021

Americans failed to safeguard decades of diplomatic and financial investments in Congo, where the world's largest supply of cobalt is controlled by Chinese companies backed by Beijing

Tom Perriello saw it coming but could do nothing to stop it. André Kapanga too. Despite urgent emails, phone calls and personal pleas, they watched helplessly as a company backed by the Chinese government took ownership from the Americans of one of the world's largest cobalt mines…It was 2016, and a deal had been struck by the Arizona-based mining giant Freeport-McMoRan to sell the site, located in the Democratic Republic of Congo, which now figures prominently in China's grip on the global cobalt supply. The metal has been among several essential raw materials needed for the production of electric car batteries - and is now critical to retiring the combustion engine and weaning the world off climate-changing fossil fuels…Presidents starting with Dwight D. Eisenhower had sent hundreds of millions of dollars in aid, including transport planes and other military equipment, to the mineral-rich nation. Richard Nixon intervened, as did the State Department under Hillary Clinton, to sustain the relationship. And Freeport-McMoRan had invested billions of its own - before it sold the mine to a Chinese company…Not only did the Chinese purchase of the mine, known as Tenke Fungurume, go through uninterrupted during the final months of the Obama administration, but four years later, during the twilight of the Trump presidency, so did the purchase of an even more impressive cobalt reserve that Freeport-McMoRan put on the market. The buyer was the same company, China Molybdenum…China's pursuit of Congo's cobalt wealth is part of a disciplined playbook that has given it an enormous head start over the United States in the race to dominate the electrification of the auto industry, long a key driver of the global economy…But an investigation by The New York Times revealed a hidden history of the cobalt acquisitions in which the United States essentially surrendered the resources to China, failing to safeguard decades of diplomatic and financial investments in Congo. The sale of the two mines, also flush with copper, highlights the shifting geography and politics of the clean energy revolution, with countries rich in cobalt, lithium and other raw materials needed for batteries suddenly playing the role of oil giants…Freeport-McMoRan had been determined to sell. The company, one of the world's largest copper-mining outfits, had made a catastrophically bad bet on the oil and gas industry just before oil prices tanked and the world began to shift to renewable energy. With debt piling up, the company saw no option but to unload its Congo operations…The American response, in essence, was nothing because it was a straight financial transaction. Though the country, through the Committee on Foreign Investment in the United States, reviews overseas investments in American companies for national security risks, it has no oversight of transactions by American companies abroad…Over the past year, as the clean energy transition has accelerated, the U.S. government and the private sector have moved more rapidly to recover from past mistakes, scouring the world for new cobalt supplies and deploying cobalt-free batteries in some shorter-range electric cars…But all of that falls far short of Chinese efforts to take over resources critical to a green future, including cobalt, lithium and others…The lack of a formal industrial policy for minerals and metals has come at a cost to the United States, diplomats from the last two administrations said…The fallout is now complicating Mr. Biden's push to make electric vehicles a central pillar of his climate change agenda. At a General Motors factory in Detroit last week, Mr. Biden acknowledged that "something went wrong along the way," adding, "You know, up until now, China has been leading in this race, but that's about to change."..The Tenke Fungurume mine, now controlled by a Chinese company, produces twice as much cobalt as any other country in the world…Freeport-McMoRan made a monumental blunder. Instead of doubling down on mining, it ventured into fossil fuels, spending $20 billion in 2012 to buy two oil and gas companies…When oil prices plummeted, Freeport-McMoRan found itself mired in debt. The company shut down offshore oil rigs in the Gulf of Mexico and laid off hundreds of workers. It fired the president and other top executives at its money-losing oil and gas division and searched in vain for a buyer… "It breaks my heart to do it," Mr. Adkerson told Wall Street analysts in May 2016 when he announced the company would sell Tenke Fungurume…The only bidders that wanted all of the company's stake were from China. Backed by billions of dollars in government loans, Chinese mining companies had been waiting for just this kind of opportunity…The top bidder was China Molybdenum, which offered $2.65 billion. The company had the money available, and it "allowed them to move very quickly," Mr. Adkerson said.