Evaluating the Lobito Corridor: The Future of Cobalt in Sub-Saharan Africa

The Lobito Corridor, a sub-Saharan mine-to-port railway, presents a strategic opportunity for reducing dependency on China for cobalt. By upgrading 800 miles of railway connecting the Democratic Republic of the Congo (DRC) to Angola—and potentially extending into northern Zambia—the corridor aims to streamline the transport of raw cobalt. However, refining the mineral within Africa could offer additional benefits. Establishing local refineries near the DRC’s mining regions would shorten the lengthy transit to international ports and reduce delays from road-based routes.

Despite the project’s promise, significant challenges exist. Current supply chains rely heavily on transporting raw materials by truck over extensive distances, with further complications arising at borders and due to port closures from political or environmental events. Developing local refining capacity in the DRC would strengthen regional economies and reduce logistical complications.

Growing Demand for Critical Minerals by 2040

By 2040, the demand for minerals like lithium, graphite, nickel, and cobalt is expected to surge, with clean-energy technologies requiring up to 40 times more lithium than in 2020. These metals are essential to EV and smartphone batteries, making the shift to clean energy heavily reliant on their availability. The Democratic Republic of Congo (DRC) holds nearly 80% of global cobalt reserves, while China dominates the refining market, controlling around 70–80% of cobalt refining and over half of the global battery market.

The Lobito Corridor: West’s Answer to Supply Chain Dependency

To diversify access, the U.S. and European Union have committed to the Lobito Corridor, a rail project aimed at transporting cobalt and other minerals from the DRC to Angola’s Atlantic port. This route would enable streamlined transport from Africa, reducing dependency on China’s supply chain. The 800-mile upgrade could extend into Zambia, opening critical logistics channels for cobalt export.

The Lengthy Path from Mining to Refining

Currently, the cobalt mined in the DRC is primarily refined abroad, especially in China, due to limited domestic refining capabilities. Transporting raw materials from the mining hub of Kolwezi to South Africa’s Port of Durban often takes a month, with additional delays common due to border bottlenecks, strikes, and infrastructure challenges. Other routes through ports like Walvis Bay, Beira, and Dar es Salaam face similar logistical hurdles, emphasizing the need for more efficient, local refining and transport solutions within Africa.

Transitioning to Rail with the Lobito Corridor

The Lobito Corridor offers a faster, more eco-friendly alternative to road transport, connecting Kolwezi to Angola’s Lobito port in just eight days, half the distance to Durban. Spanning 800 miles of existing track, it minimizes environmental impact by reducing emissions and avoiding deforestation. Initially built as the Benguela Railway, the route saw significant restoration post-Angolan civil war, with recent investments from the Lobito Atlantic Railway consortium.

The Lobito Corridor, however, doesn’t fully resolve Western cobalt dependency. Despite Western-backed rail developments, Chinese firms still control the majority of the DRC’s cobalt mines, limiting Western access to these resources despite the new rail investments.

In 2023, a consortium and international stakeholders, including the U.S., EU, AfDB, and AFC, committed to a shared project vision, with costs projected between $1 billion and $2.3 billion and substantial funding already secured.

Competing Railways and Local Refining: Navigating Southern Africa’s Resource Transit

China recently announced plans to invest over $1 billion in revamping the Tazara Railway, linking Zambia’s copper mines to Tanzania’s Dar es Salaam port, with completion potentially outpacing the Lobito Corridor. Both railways allow open access for global companies, meaning Chinese firms could use Lobito despite its Atlantic direction, as seen with Chinese firm Zijin Mining’s joint venture as Lobito’s inaugural customer.

Yet, without local refining, mineral-rich countries remain economically marginalized. To address this, the DRC and Zambia aspire to establish a special economic zone for preliminary battery material production. While the U.S. and EU have backed sub-Saharan refining via memorandums of understanding, tangible progress is lacking. Meanwhile, China’s investments, like its $1.4 billion lithium-processing plant in Zimbabwe, highlight its advanced approach to African resource value addition.

Local Refining: A Triple Win for Sub-Saharan Africa, Western Nations, and Climate Goals

Establishing refining facilities in sub-Saharan Africa offers advantages for the region, Western economies, and environmental objectives. Building a plant in the DRC, for instance, costs about a third of a comparable setup in the U.S. or China. Using local hydroelectric power would lower emissions by 30%, while reducing transport emissions from shipping unrefined materials to China.

The DRC, home to roughly 80% of global cobalt reserves, holds only a minor role in the battery value chain. Mining deals, such as the 2008 Sicomines pact with China, often yielded limited infrastructure investment for the DRC. By refining locally, southern Africa could profit from semi-finished materials like battery cathode precursors, with 85% of operational costs driven by raw materials. Although the DRC lacks sufficient nickel and manganese, neighboring countries such as Zimbabwe and Tanzania could provide these materials, fostering regional integration and economic gains.

Investing in Local Refining: A Step Toward Diversification and Stronger Ties

Investing in sub-Saharan refining could support the West’s goals to diversify its critical mineral supply chain and reduce dependency on Chinese-controlled cobalt processing. While such regional efforts wouldn’t grant full autonomy, they could reduce the West’s reliance on China’s battery supply chain and enable a more balanced partnership with sub-Saharan Africa.

The Complexities of Building a Local Refining Industry

Developing refining plants in sub-Saharan Africa presents hurdles, from a $39 million startup cost per facility to requiring skilled labor and reliable infrastructure. The Lobito Corridor could play a role in transporting materials, yet the challenges of political instability in the DRC, infrastructural needs, and human rights issues in mining regions highlight the importance of a broad, collaborative approach with support from the West. Additionally, neighboring countries with greater stability might offer safer locations for refining plants, supporting regional growth while mitigating risks.

Progress in Local Refining Efforts

Despite obstacles, strides in local refining have begun. In October 2023, Eurasian Resources Group started construction on an $800 million hydrometallurgical plant in the DRC to produce copper and cobalt by 2025. Local companies are also advancing; Buenassa, with government support and Delphos International, plans a $350 million smelter. The African Finance Corporation has also shown interest in financing a $100 million refinery in Zambia.

A Timely Opportunity

The West’s interest in sub-Saharan critical minerals aligns with China’s reduced African imports, underscoring the potential of refining investments to diversify supply chains and decrease dependence on China. While the Lobito Corridor could facilitate these ambitions, real progress requires support for local refining to secure Western partnerships and build a sustainable mineral supply.

Source: Harvard International Review