As U.S. policymakers grapple with China’s dominance in producing the materials needed for so-called clean energy and other cutting-edge technology, the case of cobalt serves as a warning.
China’s state-directed industrial policy has outmaneuvered America’s laissez-faire approach to securing access around the world to a metal that’s taking on growing economic and strategic importance. Its success is sparking a debate over whether Washington needs to intervene to encourage more mining at home.
Used for millennia to make rich blue pigment for ceramics, cobalt now plays an important role in lithium-ion batteries — conducting heat to prevent them from catching fire in smart phones and electric vehicles. Cobalt’s other commercial, industrial and military applications, from jet engines to magnets, spurred the U.S. government in 2018 to deem it a commodity of “strategic and critical” importance to U.S. security.
Yet today’s global cobalt supply chains are dominated by China — the result of two decades of Beijing’s relentless efforts to dominate what it assesses as likely to be key industries of the future, according to interviews for a new episode of POLITICO’s Global Translations podcast being released Wednesday.
“This is a strategic thinking on their part — that ‘these are materials that are strategic for our needs and we're going to make sure that we have access to them,’” Nedal Nassar, chief of the Materials Flow Analysis Section at the National Minerals Information Center at the U.S. Geological Survey, told the podcast.
In a USGS review of 50 commodities, Nassar identified cobalt as one of the of materials at highest risk of supply disruptions. Most of the world’s cobalt is currently produced in the Democratic Republic of the Congo. Nedal estimates that somewhere between 40 percent and 50 percent of the DRC’s cobalt production is owned by Chinese companies. “A lot of it leaves the DRC and gets shipped to China for further processing,” said Nassar, adding that about two-thirds of the entire world’s cobalt refining takes place in China.
China’s drive to secure its own access to cobalt has been driven by an approach that put long-term goals over short-term profits. For the last two decades, China has invested heavily in cobalt mining operations in Africa. Beginning in 2000, Beijing encouraged overseas foreign investment in developing countries, especially in natural resources such as minerals. Beijing’s “Belt and Road” initiative in 2013 then started pumping an estimated trillion dollars into building trade corridors between China and Africa and Europe. As part of a $6 billion deal in 2007 dubbed “minerals for infrastructure,” China secured mining rights in a major cobalt mine in the DRC in exchange for building projects such as roads, highways and hospitals.
Analysts contrast China’s government-led approach to securing direct control over the supply chain with America’s reliance on outside producers in the marketplace, accepting greater risk of disruption or shortages in exchange for lower short-term costs.
“The Chinese deserve a great deal of credit for being farsighted,” Sharon Burke, a former Pentagon official now leading the resource security group at the New America think tank, told a recent episode of the podcast. “They wanted to have a vertical production. They wanted to own the raw resource, but also be fabricating the batteries and all of that. And so they had a very strategic approach to this, whereas ours was dominated by a private sector that was operating on different principles.”
Demand for cobalt is expected to grow as the world moves to a greater reliance on renewable energy and electric vehicles.
“The constraining factor on electric vehicle adoption is ultimately going to be raw materials,” Bryce Crocker, CEO of Jervois Mining, an Australian mining firm. “There’s simply not enough raw materials for all the vehicle makers to roll out their development plans over the next 10 to 15 years based on the availability of cobalt, given the supply constraints we see today.”
Crocker is developing the only mine in the United States set up to primarily produce cobalt, in Idaho’s Lemhi County. The mine is permitted and under construction, projected to open in mid-2022.
“Those of us in the industry have been talking to regulators and politicians for a long time, but the level of traction now, it’s different. I mean, Washington is genuinely paying attention,” Bryce said.
Last year, in response to an executive order from President Donald Trump, the USGS published America’s first formal critical minerals strategy. The policy called for faster permitting of mining on federal lands and launched a new mapping initiative to locate deposits of certain minerals and metals, including cobalt, in the U.S.
“The Trump administration is dedicated to ensuring that we are never held hostage to foreign powers for the natural resources critical to our national security and economic growth,” said Interior Secretary David Bernhardt in announcing the strategy.
Domestic mining is not the only way to secure supply chains, however. Other policy approaches include mining collaboration with mineral-rich allies such as Australia and Canada, and recycling of scarce materials. The scientific race is on to eventually develop batteries that use less cobalt or, one day, none at all.
The Initiative for Responsible Mining Assurance, or IRMA, works with governments, mining companies and environmentally conscious organizations to create guidelines for mining to be environmentally and socially sustainable, as well as profitable.
“We know that this extraction leaves harm behind that lasts not just decades, but often hundreds of years,” Aimee Boulanger, the executive director of the initiative, told the podcast. She cited mining waste and water pollution as problems that the increased hunting for raw materials like cobalt are likely worsen.
“We should make things that are more efficient and use our materials more efficiently. We should do more recycling — retrieving our materials and putting them back to use so we don't have to do new mining,” Boulanger said.
But with demand for batteries set to soar, recycling alone won’t be enough, many experts say. Crocker, the mining executive, argues that ready access to cobalt and other minerals will shape the global competitive landscape in coming decades.
“China is not processing that refined cobalt to export to the United States to support your electric vehicle revolution,” Crocker said. “They’re going to make cheap cars themselves and the best you can hope for is that they’ll export cheap cars to you.”