A thread on the DRC and transition risk.
According to this article, the state in DRC is "tottering", "ethnic militias are proliferating" and 2m people were displaced from their homes last year.
According to this article, the state in DRC is "tottering", "ethnic militias are proliferating" and 2m people were displaced from their homes last year.
First off, can I make clear I appreciate any political deterioration in the DRC has the potential to be a grim human tragedy. Please take this is as read. I'm not a heartless western capitalist with tunnel vision who only cares about mineral supply.
That said, if the world is developing any kind of dependence on resources from DRC, it needs to understand the implications. The world’s two most populous countries are committed to EVs. Billions are being invested in battery production. China sources 93% of its cobalt from DRC.
Major car companies are struggling to secure cobalt supplies. They're going to struggle a lot more if Congo descends into civil war & warlords appropriate the mines they depend on. Worse, if the past is anything to go by, the cobalt trade could end up fuelling such a conflict
The Dodd-Frank Act, which requires US firms to do due diligence on whether they are funding conflict in the DRC through mineral trade, doesn't include cobalt, and whether it will even apply under the Trump admin is uncertain
theguardian.com/us-news/2017/f…
theguardian.com/us-news/2017/f…
People say China has such a stake now in Africa that it had a hand in removing Robert Mugabe. How they might react to any deterioration in the DRC is frankly anyone's guess for most people in Europe and the US.
If the world has learned anything from the ICE era, it's that it's a mistake to make our mobility dependent on resources from politically unstable, conflict-prone regions. The DRC currently accounts for 58% of production and 49% of reserves. USGS:
minerals.usgs.gov/minerals/pubs/…
minerals.usgs.gov/minerals/pubs/…
For comparison, the Middle East accounts for 35% of oil production and 48% of proved reserves. No single country accounts for more than 18% of reserves (that country is outside the ME, Venezuela). In other words, oil supply is more diversified than cobalt supply.
Over the past few months, security of supply of cobalt has become a hot topic. Everyone knows that DRC is unstable, most commentary acknowledges this. Nevertheless, I'm surprised not to have seen more awareness of the acute immediate term risks described in the Economist piece
Yes, there are efforts to make batteries less reliant on cobalt, and given the price and projected demand of cobalt, reserves will no doubt be redefined. It's currently small beer though.
bloomberg.com/news/articles/…
bloomberg.com/news/articles/…
The @FSB_TCFD promotes a concept called "transition risk", a catch-all for the type of risks that could arise from the shift away from fossil fuels. They include changing policies, shifts in demand, technological disruption, legal and reputation risk.
What this illustrates though is that we also need to develop broader foresight on what it means to reconfigure the world's resource production, consumption and dependency patterns.
We also need to diversify away from the Li-ion battery. There is too much scope for supply bottlenecks, intense resource competition, funding bad people in unstable places and supply chain risk. I hope governments and car companies will look seriously at that. END.
