Christian Géraud Neema Byamungu
The United States, Zambia, and the Democratic Republic of Congo (DRC) signed a memorandum of understanding (MOU) on the electric vehicles (EV) batteries industries in December 2022. This agreement, “Memorandum of Understanding among the United States of America, the Democratic Republic of the Congo, and the the Republic of Zambia Concerning Support for the Development of a Value Chain in the Electric Vehicle Battery Sector,” aims “to facilitate the development of an integrated value chain for the production of electric vehicle (EV) batteries in the DRC and Zambia.” The MOU has been widely perceived as a major and concrete U.S. move to counter China in the supply chain of critical minerals in Africa. The agreement will have to overcome major challenges to be a success story for three countries but mainly for DRC and Zambia.
DRC and Zambia are among the main world producers of copper and cobalt—the DRC itself produces 67–70 percent of the world's cobalt—which are key to the production of batteries for electric vehicles, and Zambia ranking as the world's eighth-largest copper producer and second in Africa. In these two countries, China has been the dominant player for many years. In DRC it controls close to 80 percent of the copper and cobalt production and worldwide process 73 percent of the world's cobalt.
China's dominance over the supply chain of key minerals to the energy transition had many in the West worried, especially in the United States, where the Biden administration is looking to scale up EV sales by 2030. The agreement signed last December in Washington at the U.S.-Africa Leaders’ Summit is signaling the Biden administration's willingness to act and reduce dependence on China as much as possible.
Political attempts were made in DRC where the United States had pushed President Felix Tshisekedi to revise previous Chinese deals in the country. For instance, Washington had convinced President Tshisekedi to revise the so-called Sicomines contracts signed under his predecessor Joseph Kabila. So far, the move has not been able to bear tangible results, much to Washington’s dismay.
With this agreement, the United States is making a step toward a rather concrete approach by addressing the economic and industrial needs of DRC and Zambia countries which had recently signed a bilateral agreement to build electric batteries for EVs.
Beyond the excitement and the debates, policymakers should look at the factors that may affect its success:It is a nonbinding agreement. The documents merely express the interest of the three countries to work together. It does not guarantee its implementation which is dependent on many factors—internal to U.S. politics—that the Biden administration cannot control. And as it said in the agreement: “This Memorandum of Understanding is not intended to be legally binding and is not an obligation of funds. All activities pursued under this Memorandum of Understanding are subject to the availability of funds.”
It needs support from the U.S. private sector. The effective implementation and success of the agreement would rely partially—if not entirely—on the ability of the administration to compel private U.S. companies to invest in the DRC. For the last few years, the Congolese mining industry and especially its cobalt have garnered quite a negative reputation in the United States. From corruption to child labor, the Biden administration would have to provide strong incentives for U.S. firms to invest in DRC. To that effect, the agreement states: “The United States intends to take appropriate steps to promote awareness of the DRC and Zambia Electric Vehicle Battery initiative within the U.S. private and investment sector. This could include commercial development, where appropriate.”
Two sets of incentives will need to be considered here: business and risk. The Biden administration will need to consider a wide range of economic measures for the companies engaged in the critical minerals sector. And the Inflation Reduction Act with its provision on tax for EV makers seems to attend to these issues, at least part of them. the Biden administration as well as the private sector will have to consider risk incentives. A lot of work will need to be done on the ground in both DRC and Zambia. Corruption and bad governance in the mining sector are mere symptoms of a larger issue of governance in these countries. To address them will require a deep, coherent, and permanent political engagement, which may take time before creating the ideal well-governed mining industry in these countries.
U.S.- China Competition and Zambia and DRC’s Agency
In a context where the United States is trying to counter China in the critical mineral supply chain, the implementation of an agreement like this raises the question of the real level of agency of these two African countries, which recently expressed their opposition to choosing between China and the United States. One clause of the MoU could test the limits of their declarations and their level of agency in this agreement.
Section II of the MOU states:
The Participants intend to cooperate in feasibility studies, consultancies, and technical assistance opportunities to facilitate transparent, competitive tenders to find the best and most cost-effective contractors and partners to advance the DRC-Zambia Cooperation Agreement on the Establishment of a Value Chain in the Electric Battery and Clean Energy Sector. Each Participant may determine for itself if a project is suitable for investment.
There is a relevant question for this section: Would Chinese companies be considered under this framework if they happen to offer the most cost-effective offer?
The overall assumption cannot be and should not be the inability of Chinese companies to compete and be cost-effective in a corrupt-free environment. Moreover, one could fairly assume that with their years of experience in processing critical minerals, Chinese companies would have a unique advantage in offering the best technology and maybe the most cost-effective offers. Would they be excluded if that happens to be the case?
What It Will Take for the Agreement to Succeed
The agreement would have to stay true to its official goals and narrative, not being a geopolitical tool. Without a doubt, it offers a unique opportunity for these two countries to move up the ladder of the value chain. The competitiveness it brings into a sector largely dominated by China would offer more bargaining chips to DRC and Zambia toward Chinese companies. However, for the agreement to succeed, its implementation will have to refrain from geopolitical consideration and Zambia and DRC should be able to set the agenda for their interest first.
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