Zambia seeks Western financiers for EV battery project with DRC 

By Chiwoyu Sinyangwe

Posted on Thursday, 25 August 2022 16:46
A worker prepares a component that uses a lithium battery before it is installed into a bus at an electric bus factory and assembly plant in Rancagua, Chile July 20, 2022. REUTERS/Ivan Alvarado

Zambia says it will seek Western lenders for its plans to partner with the Democratic Republic of Congo (DRC) to jointly start producing electric vehicles batteries and cement a firm position in the global supply chain. 

The mineral-rich belt that straddles Zambia and the DRC produces more than 70% of global cobalt of which more than 95% is exported in raw form, depriving the two countries of the much-needed place in the electric vehicle value chain.

Last April, Zambian President Hakainde Hichilema and his DRC counterpart Félix Tshisekedi witnessed the signing ceremony in Lusaka for the cooperation agreement expected to provide a framework for cooperation on the initiative to develop the battery value chain.

Revamping cobalt production in Zambia

Historically, Zambia mines cobalt as a byproduct of copper, the country’s mainstay. During the heydays of mining activities, Zambia’s cobalt production peaked at 5,700 a tonne per year in 2010 before plummeting to 367 tonnes produced by 2019, a move largely blamed on low metal prices, the previous Patriotic Front regime’s fractious relationship with mining companies and anti-mining investment policies among other factors.

Zambia’s biggest cobalt plant, Chambishi Metals Plc, was forced to indefinitely shut down in 2019 after the government imposed a five per cent duty on imported cobalt concentrates from the DRC mines. Chambishi Metals survived largely on treating ores from the DRC.

The[re] are discussions with people who would want to invest in Chambishi Metals and these discussions are advanced…

The Chambishi Metals, a refinery plant for Copper and Cobalt is owned by the Eurasian Resources Group (ERG) of Kazakhstan. ERG also owns Boss Mining and Frontier Mine in DRC.

The government expropriation of the operation Konkola Copper Mines (KCM) from the legal owners, India’s Vedanta Resources, through the appointment of a provisional liquidator in 2019 – following a string of disputes – completely wiped out cobalt production at the mine.

Chambishi Metals Plc has been under ‘care and maintenance’, but the government wants to see the plant back in operation to help meet the anticipated boom in the production of lithium-ion battery cathode precursor materials.

Mines minister Paul Kabuswe has disclosed that the ERG is planning to sell its 90% stake in Chambishi Metals Plc so that it could concentrate on its two mines in the DRC.

“The[re] are discussions with people who would want to invest in Chambishi Metals and these discussions are advanced, but procedure has to be followed,” says Kabuswe.

“We would like Chambishi Metals to resume operating like yesterday both for the purpose of job creation for our people in Zambia and DRC and also for us to be ready for the expected boom in cobalt production,” he adds.

According to multiple government sources, production at Chambishi Metals is expected to resume by next October. Peter Sinkamba, a mining environmental expert, says any further delay to resume operations at Chambishi Metals could negate the efforts of Zambia and DRC to realise the dream of becoming global players in the electric car battery value chain.

“If it were up to [me], I would urge the government to do to Chambishi Metals what it did to Mopani Copper Mines. We can’t allow that Plant to remain shut without even knowing when it will reopen,” said Sinkamba.

We want to be the first in the region […], to set up tangible projects investment in the electric vehicle related industry…

To avert a pending closure then, the government bought off Mopani Copper Mines (MCM) from Glencore, in a $1.5bn deal heavily criticised by key stakeholders as having been unfair to Zambia. The deal was financed through debt.

The government is currently looking for an investor for its stake in MCM to avert further haemorrhage of the national treasury.

The government is currently funding MCM’s key operational costs due to the company’s liquidity crunch blamed on its huge debt to Glencore’s wholly-owned Carlisa Investments Corporation.

MCM has also announced that it will, from next year, start producing between 4,000 and 5,000 tonnes per year of cobalt. Cobalt production at MCM was halted in 2011 following the fall in global prices.

Hichilema said Zambia needs to use its minerals as well as leverage its relationships with its mineral-rich neighbouring country to build value addition to minerals, such as nickel, cobalt and lithium, whose demand has been propelled to multi-year highs by the accelerated sales of electric vehicles.

[…] how can we isolate a small component in a car, we want other accessories. We have the copper…we have the cobalt

First Quantum Minerals, Zambia’s biggest miner, has announced plans to open the biggest nickel mine in Africa by this month to support Hichilema and his United Party for National Development’s drive to revamp Zambia’s economy through increased mineral production.

Hichilema said Zambia is going beyond the production of lithium-ion batteries and wants to start manufacturing finished copper products, such as wires and electric conductors, on a large scale. He said Zambia is planning to set up a 200-hectare industrial yard in Chingola, 51 kilometres from the DRC border.

“We want to be the first in the region here outside of South Africa, to set up tangible projects investment in the electric vehicle related industry [and] therefore it means working with everybody; going to IFC [International Finance Corporation], working the World Bank, working with European Investment Bank, working with off-takers… At the end of the day, it’s growth [that] we want, it’s jobs, it’s business opportunities, it is local content,” Hichilema said in Lusaka on the sidelines of the just ended African Union mid-year summit 2022.

“We agreed that we are not here to talk about the electric vehicles’ batteries…how can we isolate a small component in a car, we want other accessories. We have the copper…we have the cobalt,” he said.

New electricity projects

Producing the batteries in Zambia and the DRC is expected to cut emissions associated with the existing supply chain largely due to the two countries’ heavy reliance on hydroelectric power and close proximity to minerals.

Zambia consistently exports power to the DRC and with the expected boom in mineral production, the two countries want to bolster power generation through collaboration.

Zambia’s ZESCO and the DRC’s Snel signed an agreement to develop different sites on the Luapula River to produce 1,188 megawatts in Northern Zambia. The two countries agreed to set up a jointly owned statutory body to manage the Luapula River, which is a section of Africa’s second-longest river, the Congo.

The Southern Africa region exports power to the DRC solely through the line owned by the privately-owned Copperbelt Energy Corporation (CEC) in Zambia. However, the Zambia government wants to build a new line to be owned by ZESCO from the mineral-rich North-Western Province to the DRC’s Kolwezi to create an alternative route for transmitting power into the DRC.

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