Cornering the market with foreign direct investments: China's cobalt politics

Abstract

The market for cobalt, which is one of the elements needed in the production of electric batteries, is increasing in importance and demand globally. Key players in this market include the Democratic Republic of Congo (DRC), which maintains a large share of world reserves, and China, which plays a central role in the rest of the supply chain despite its scarcity of reserves. However, how China dominates this market despite little domestic production has not been explored. This quantitative case study examines the relationship between China's foreign direct investment (FDI) in the DRC and its cobalt supply from the DRC. Using two datasets from the United Nations, we find that investors import significantly more cobalt than non-investors. In addition to the close alignment between FDI and natural resources, we also explore the political context behind China's FDI in the DRC. China's effort to expand its sphere of influence in the direction of ‘going out’ is the opposite of Western countries’ policies, as an attempt to increase access to a politically and economically unstable country's natural resources. Consequently, if the West is to pursue battery technology as a means to reduce greenhouse gas emissions, it will either need to invest in the politically unstable DRC or accept that China will substantially control the world's supply of cobalt needed for battery production.