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How the U.S. Lost Ground to China in the Contest for Clean Energy

How the U.S. Lost Ground to China in the Contest for Clean Energy

How the U.S. Lost Ground to China in the Contest for Clean Energy
Nov 21, 2021 7 mins, 4 secs

Americans failed to safeguard decades of diplomatic and financial investments in Congo, where the world’s largest supply of cobalt is controlled by Chinese companies backed by Beijing.

Despite urgent emails, phone calls and personal pleas, they watched helplessly as a company backed by the Chinese government took ownership from the Americans of one of the world’s largest cobalt mines.

It was 2016, and a deal had been struck by the Arizona-based mining giant Freeport-McMoRan to sell the site, located in the Democratic Republic of Congo, which now figures prominently in China’s grip on the global cobalt supply.

Kapanga recalled warning him, suggesting the Americans were squandering generations of relationship building in Congo, the source of more than two-thirds of the world’s cobalt.

Not only did the Chinese purchase of the mine, known as Tenke Fungurume, go through uninterrupted during the final months of the Obama administration, but four years later, during the twilight of the Trump presidency, so did the purchase of an even more impressive cobalt reserve that Freeport-McMoRan put on the market.

China’s pursuit of Congo’s cobalt wealth is part of a disciplined playbook that has given it an enormous head start over the United States in the race to dominate the electrification of the auto industry, long a key driver of the global economy.

But an investigation by The New York Times revealed a hidden history of the cobalt acquisitions in which the United States essentially surrendered the resources to China, failing to safeguard decades of diplomatic and financial investments in Congo.

The sale of the two mines, also flush with copper, highlights the shifting geography and politics of the clean energy revolution, with countries rich in cobalt, lithium and other raw materials needed for batteries suddenly playing the role of oil giants.

The loss of the mines happened under the watch of President Barack Obama, consumed with Afghanistan and the Islamic State, and President Donald J.

For decades, the United States worried that the Soviet Union would gain control of Congo’s copper, cobalt, uranium and other materials used in defense manufacturing.

In Africa, in particular, the United States pivoted toward human rights and good-governance issues.

Perriello, who has since left government, said he learned of the plan in 2016 to sell Tenke Fungurume not long after touring the mine.

Still, he was convinced that American ownership was good not only for the United States but for the people of Congo.

Perriello recalled asking Linda Thomas-Greenfield — who was then an assistant secretary of state with responsibility for Africa and is now President Biden’s ambassador to the United Nations — about keeping the mine under American control.

With debt piling up, the company saw no option but to unload its Congo operations.

Though the country, through the Committee on Foreign Investment in the United States, reviews overseas investments in American companies for national security risks, it has no oversight of transactions by American companies abroad.

leaders, was just the kind of opportunity the Chinese government excels at exploiting, according to previously unreported documents and emails and interviews with diplomats, mining executives, government officials and others in China, Congo and the United States.

government and the private sector have moved more rapidly to recover from past mistakes, scouring the world for new cobalt supplies and deploying cobalt-free batteries in some shorter-range electric cars.

company to step in — would have required a tool kit of options requiring a formal government policy.

A bill that passed the House last week included tax incentives for buyers of electric vehicles and funding for charging stations across the United States.

The lack of a formal industrial policy for minerals and metals has come at a cost to the United States, diplomats from the last two administrations said.

Nagy Jr., an assistant secretary of state for African affairs during the Trump administration.

Not only did he control those resources, but he had emerged as a key intermediary for the United States in its efforts to keep the Soviet Union from making inroads in Africa.

Access to minerals and metals in Congo had been a top priority for the United States since at least World War II.

“The United States has only very poor ores of uranium in moderate quantities,” Mr.

The United States has only very poor ores of uranium in moderate quantities.

Uranium, cobalt, copper and other ores from Congo are coveted for their extraordinary purity.

They are of such high grade that waste piles from old mines often contain more cobalt and copper than most active mines elsewhere in the world.

With an eye to developing Tenke Fungurume, he reached out to a prominent New York diamond merchant named Maurice Tempelsman, according to a series of now declassified cables, to discuss giving him mining rights in the area.

The United States also committed $130 million in loan guarantees and other financing to help develop Tenke Fungurume.

The United States had won the international competition, at least for the moment.

embassy in Congo to the State Department.

Mark Mollison, a mining engineer from New York City, climbed into a Toyota Land Cruiser in southeastern Congo, where he had traveled to visit Tenke Fungurume.

He saw hilltops with bald spots where copper and cobalt poked through the surface.

After angling during the Nixon administration to get the concession and spending $250 million, the group had pulled out when it ran into a series of hurdles, including anti-government rebels who shut down a railroad needed to ship the cobalt and copper to the sea.

Kissinger, the secretary of state, helped craft a cable to apologize to the Congolese government in January 1976, explaining that the United States “deeply regrets” the “mothballing” of the project, which left behind little but these ruins.

The rebel leader, Laurent-Désiré Kabila, had recently seized valuable land near Tenke and Fungurume, the two towns that gave the mine its name, and used the perch to launch his insurgency.

Lundin Group, a Canadian mining company, was so determined to seal a deal that it agreed to give the rebels $50 million.

Tempelsman had started at Tenke Fungurume.

Congo’s state mining enterprise, Gécamines, kept 17.5 percent.

Mining executives soon used airplanes to make the commute.

It helped construct a highway so cobalt and copper could be exported to other parts of Africa.

Sensitive to concerns that the mine would not benefit the Congolese, Freeport-McMoRan and Lundin drilled wells to provide water to 64 villages, built schools to serve more than 12,000 students and, in Fungurume, where the population had exploded as people arrived to fill jobs, constructed a large market hall to keep vendors dry during the rainy season.

“They were training the Congolese workers not just for menial tasks but getting them degrees and advanced degrees at universities in the United States and elsewhere,” said Mr.

Entire villages — Amoni, Kiboko and Mulumbu — were leveled to make room for the mining complex, and relocating their 1,600 residents was a fraught process.

Freeport-McMoRan had developed one of the most modern and productive cobalt and copper mines in the world, and before long, the Congolese government began pressuring the company for a bigger share of the profits.

The company turned to the U.S.

government to help push back, and the State Department, under Mrs.

Adkerson told Wall Street analysts in May 2016 when he announced the company would sell Tenke Fungurume.

Backed by billions of dollars in government loans, Chinese mining companies had been waiting for just this kind of opportunity.

“Tenke Fungurume is the jewel in the crown,” Mr.

Swan, worried the United States was inexplicably letting go of its biggest private investment in Congo.

Most cobalt was mined in Congo, the report pointed out, and China was starting to corner the market.

The solution, the White House decided, was to create an “early warning” system to ensure the United States was alerted to threats to this supply

Rick Gittleman, a mining executive and lawyer who had worked at Freeport-McMoRan in Congo, alerted Gen

The focus at the time for American diplomats in Congo centered on trying to urge President Joseph Kabila out of office

On a flight to the United States, Mr

The sale of Tenke Fungurume closed in November 2016, just a few weeks after Mr

It drew little attention in the United States outside the financial news media

His administration issued reports on cobalt and the potential for supply shortfalls, taking note of the Tenke Fungurume sale

investment in Congo’s cobalt and copper mines evaporated

Eric Lipton reported from Washington, and Dionne Searcey from Fungurume

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