The Competition Between China, the US, Congo, and Saudi Arabia
The competition between China, the US, Congo, and Saudi Arabia over minerals used in the production of electric vehicles. When the Democrats’ new investment plan in the American economy and society was ready for approval, everyone was surprised by the agreement and unity among Senate Democrats regarding this plan. Senator Manchin, a Democrat, had long opposed the plan, and finally, his sudden announcement of support and approval arrived. This plan, which with great enthusiasm eventually reached Joe Biden’s desk and was signed, is called the Inflation Reduction Act, and contrary to its name, it will not have a significant impact on inflation.
What is important in this plan are the achievements that are supposed to be gained through America’s extensive and historic investment in various sectors in the fight against climate change. One of the major investment aspects of this plan in combating climate change is the various supports for the development of electric vehicle usage in America, and naturally, a significant part of this support will be directed towards the different production processes of such vehicles in America.
Electric vehicles are known by everyone through Tesla and Elon Musk, yet the production process of these vehicles involves intricacies and necessary components that themselves have been the subject of the hottest economic and political competitions in recent months and will continue to make headlines in the coming months.
From Cobalt to Lithium
At the top of the minerals used in electric vehicle batteries is cobalt, and it should be noted that lithium itself has long been a key metal in the automotive industry in general, and now the next generation of electric vehicle batteries is set to rely on lithium instead of cobalt.
Currently and for a few more years, cobalt, in conjunction with lithium, forms the heart of electric vehicles. These changes and innovations in various pathways supported by the US government will solely be for supporting domestic industries and research. Interestingly, until we transition from cobalt to the newer generation of lithium batteries, the production and processing of cobalt and other metals used for electric vehicles will benefit from financial support and investment from the US government based on the newly approved Democratic plan, and this is only on the condition that the entire production process of the electric vehicle takes place in America without reliance on countries of concern, namely Russia and more importantly, China.
The most stringent approach possible has been taken in the text of this plan for the production of electric vehicle batteries in America, and special and peculiar conditions have been set so that the maximum product output is produced on American soil, otherwise, there will be no financial support or tax exemptions. Besides America, countries with a free trade agreement with America can also be part of the supply chain for battery raw materials.
These regulations and conditions, which in the final text of Biden’s beloved investment plan were slightly altered and changed but overall preserved, have specific points that will seriously impact the fate of massive investment in electric vehicle production in America and the interactions in the coming months regarding the production of strategic metals. Specific countries like Argentina and Japan, which are players in the final production of metals like lithium, do not have a direct free trade agreement with America.
Beyond all this, and most importantly, the country that is a cause for concern, which the American production industry is set to battle with through the enormous financial support of this plan, is China, which dominates the production and supply chain of cobalt and lithium. Although a significant portion of cobalt mines is not specifically in China or America, they are in Congo.
China is Scooping Up Cobalt in Congo
A significant percentage of the world’s exploitable and suitable cobalt resources are in Congo. At first glance, such a vast sea of wealth in an African country is not surprising. African countries are rich in plundered and being-plundered wealth. However, the absolute ruler of the cobalt production and distribution cycle, from extraction to processing, is China, which controls significant mines in Congo.
The company Tenke Fungurume Mining, a giant in China’s mining industry, has taken control of a significant portion of Congo’s key cobalt mines. For several months, disputes between the Chinese, specifically this mining company and its parent company, with the Congolese government and mining company have created serious sensitivity in African politics on one hand and serious discussions in the strategic metals market on the other.
Although the disputes and controversies between the two sides have somewhat subsided, and a better outlook for cooperation between the Chinese and Congolese is seen, it should be noted that the conflict between the Chinese company and the Congolese mining company had reached a point where the Congolese recently made every effort to fully take over the Chinese company operating on their soil.
The several-month-long struggle between the two sides resulted from the Congolese becoming aware of the Chinese’s false statements and incorrect statistics about the amount of Congo’s metal and mineral resources and reserves. China itself is seriously aware of the transition period from cobalt to lithium in the production of electric vehicle batteries.
Bin Salman Also Wants Electric Cars
If there is a country that has amassed immense wealth from the burning of fossil fuels in the world, air pollution, global warming, and the resultant climate changes, it is Saudi Arabia. The world’s largest oil producer, with its large refinery facilities, owns the most profitable industrial giant in the world in 2022, Aramco.
Aramco, however, is simultaneously the single most polluting industrial facility and the most dangerous for climate change globally. The Saudis’ grand plan to expand the use of electric vehicles and the prospect of bringing the number of these vehicles to 30% of the country’s total cars in the near future is not solely based on purchasing vehicles produced outside Saudi Arabia. Of course, the Saudis’ electric vehicle purchase agreements are extensive, and for example, their contract with the company Lucid, in which they are shareholders, has been very attractive.
But the Saudis’ special approach, not only in recent months but much longer than that, is production. Naturally, this idea may have been proposed by foreign consultants and Western investors, but in any case, the Saudis have made extensive investments in expanding the extraction of a special strategic metal, which is lithium.
More than 150 requests for mining exploration in Saudi Arabia are under review. Several rounds of investment and financial support for foreign companies, especially Australian mining companies, have been made, which may soon bring the total value of these investments to $30 billion. Saudi Arabia is one of the countries that may soon become a new hub for the production of strategic metals for electric vehicles and their batteries.