Investing in Africa’s Copperbelt – The Race for EV Metals

U.S., Japanese, and European companies are investing in Africa’s Copperbelt, employing cutting-edge technology to extract essential electric vehicle metals like copper and cobalt.

The global demand for electric vehicle (EV) metals has spurred a surge in investments in Africa’s Copperbelt, a region straddling Zambia and the Democratic Republic of the Congo (DRC). Companies from the U.S., Japan, and Europe are increasingly leveraging advanced technologies to identify and extract critical minerals such as copper and cobalt, challenging China’s dominance in the region.

The significance of Africa’s Copperbelt

The Copperbelt is one of the world’s most significant mining regions, rich in copper and cobalt, which are vital for manufacturing EV batteries. Zambia alone produces nearly 800,000 tons of copper annually, making it the ninth-largest supplier globally. Copper mining contributes over 10% to Zambia’s gross domestic product (GDP). The Zambian government, under the leadership of Minister of Mines and Mineral Development Paul Kabuswe, aims to triple annual production to “3 million tons by 2031” to meet rising global demand, saying, “We must be able to maximize the benefit to our economy.”

U.S. and Canadian investments

U.S.-based KoBold Metals, backed by tech magnates Bill Gates and Jeff Bezos, is pioneering the use of artificial intelligence (AI) to locate mineral deposits in northern Zambia. By analyzing soil samples and magnetic data, KoBold has identified significant copper reserves, with production expected to commence within eight years. KoBold’s initiative underscores a shift from a donor-beneficiary relationship to a partnership model, emphasizing mutual investment and growth.

Canada’s First Quantum Minerals is another major player, investing USD 1.25 billion to expand its Kansanshi mine in northern Zambia. The company plans to increase copper ore output from 135,000 tons in 2023 to 210,000 tons by 2026. This investment highlights Africa’s growing importance to global mining companies, especially amid disputes in other regions, such as First Quantum’s contractual issues in Panama.

China’s dominance and emerging competitors

China currently dominates the copper supply chain, holding nearly half of the world’s refining capacity. In 2021, about 70% of Zambia’s copper output was exported to China. Companies like China Nonferrous Mining Corp. and Jiangxi Copper are continuing to invest heavily in Zambia, with planned investments totaling USD 1.3 billion over the next five years.

However, geopolitical tensions are prompting the U.S., Europe, and Japan to seek alternative sources to mitigate economic security risks. Japan, through the Japan Organization for Metals and Energy Security (JOGMEC), is expanding its geological surveys and satellite image analysis in the region. JOGMEC is collaborating with the U.K. and promoting ESG (environmental, social, and governance) investments to address concerns over labor practices in the DRC.

Infrastructure developments and economic challenges

Efficient transportation infrastructure is crucial for moving minerals out of the landlocked Copperbelt. The U.S. and the European Union are supporting the development of the Lobito Corridor, a rail link connecting Zambia and the DRC to Angola’s Lobito Port. This project, also endorsed by Japan, aims to enhance transportation capacity and reduce shipping costs for U.S. and European markets. Late last year, Canada’s Ivanhoe Mines moved 10,000 tons of copper ore from a DRC mine on the Lobito rail corridor. It aims to boost annual shipments to up to 240,000 tons and is just one company seeking to benefit from the link.

Despite these advancements, Zambia’s economic challenges pose a potential barrier to further investments. The country defaulted on its foreign debt in 2020 and, although a debt restructuring agreement was reached in 2023, fiscal stability remains a concern. Labor issues and compliance challenges in the DRC also complicate the investment landscape.

Africa’s Copperbelt is emerging as a critical hub for the supply of essential EV metals, attracting significant global investments. With advanced technologies and strategic infrastructure projects, companies from the U.S., Japan, and Europe are positioning themselves to compete with China’s dominance in the region. However, economic and labor-related challenges need to be addressed to ensure sustained growth and mutual benefit for all stakeholders involved.

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