Chinese companies are ramping up their acquisition of major copper, cobalt and lithium mining projects in Africa, dominating the critical minerals market, as Beijing positions itself to lead the global green energy transition.
In one of the most recent investments, Chinese firm JCHX Mining Management is close to finalising a deal to buy Zambia's Lubambe copper mine.
The deal, which is awaiting approval from the Zambian authorities, would see the Shanghai-listed mining services and contracting firm hold an 80 per cent stake in the mine which is currently held by Australian-based investment firm EMR Capital, according to Reuters.
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The Zambian government, through ZCCM Investments Holdings, will hold the remaining 20 per cent of the mine, situated at Chililabombwe, a town in the Copperbelt Province of Zambia near the Democratic Republic of the Congo (DRC) border.
Technically insolvent, Lubambe copper mine would be acquired by JCHX Mining for just US$2, the firm announced early this year. The Chinese company will set up a project company to buy the stake for US$1 from EMR Capital and pay another US$1 to buy off the company's US$857 million debt.
Zambia is Africa's second-largest copper producer behind the DRC. It is also rich in gold, precious stones, nickel ore, sulphur, ferroalloys, iron bars, cobalt, tobacco and soybean meal - which has attracted many Chinese companies.
According to JCHX, it has been in Zambia for more than two decades in the contract mining and resources investment sectors, and has been the underground mining services provider of Lubambe copper mine since 2017.
Lauren Johnston, associate professor at the University of Sydney's China Studies Centre, recalls the seeds of EMR Capital from meetings in Beijing some 15 years ago, when current EMR chief executive Jason Chang was advising another set of Australians on setting up a resources fund in Australia using Chinese investment.
Johnston suggested this earlier familiarity with both the Chinese and Australian minerals investment landscape could inform a pre-emptive approach to geopolitical tensions.
"Rising renewables supply chain tensions between China and Western countries are threatening increasing limitations on and monitoring of acquisitions activity in renewables-related minerals supply chains," Johnston said.
This, and the importance of copper to new energy fields in general, she added, may help to explain both the interest of Chinese firm JCHX Mining to invest in Zambia's Lubambe mine and Melbourne's EMR Capital to sell its 80 per cent stake.
Workers separate minerals in the DRC, where Chinese companies have vast mining investments, as well as in Zambia, Botswana, Zimbabwe and other African nations. Photo: AFP alt=Workers separate minerals in the DRC, where Chinese companies have vast mining investments, as well as in Zambia, Botswana, Zimbabwe and other African nations. Photo: AFP>
The acquisition in Zambia comes a few months after Chinese company MMG, backed by state-owned mining giant China Minmetals Corporation, bought Botswana's Khoemacau copper mine for about US$1.9 billion from Cuprous Capital, a private company that has produced copper at Khoemacau since 2021.
According to MMG, the deal aligns with the company's strategy to build a portfolio of high-quality mines supplying the minerals most important to a decarbonised world. The Khoemacau mine has copper reserves of more than 6 million tonnes and mining rights covering an area of more than 4,000 sq km (1,544 square miles).
Besides the new assets in Zambia and Botswana, Chinese companies have vast mining investments in the DRC, which is the world's largest producer of cobalt and a major source of copper. Zimbabwe has also emerged as a key source of lithium, another metal essential for making lithium-ion batteries. In addition, China has invested in some large iron ore projects in Guinea, Cameroon, Sierra Leone and Algeria.
According to a recent study by Washington-based think tank Carnegie Endowment for International Peace, Africa's mineral "exports to China are on a rapid ascent, reaching nearly $50 billion in 2021 from $15 billion in 2010". Moreover, the report said, Chinese investments are beginning to cover not only the extraction of ores but also the refining and processing of them on the continent.
One important factor driving China's engagement in the African mining sector is the demand for minerals and metals needed by China's own industries, particularly those involved in renewable energy and electric vehicles, according to Zainab Usman, director of Carnegie Endowment's Africa Programme.
She said the growth momentum of African mineral exports to China will, in many respects, depend on the continued growth of those industries that require the minerals. For example, China is now the world's largest producer, consumer and exporter of electric vehicles globally.
"If the EV industry continues to grow, then we can expect an associated growth in demand for the African minerals and metals used in the manufacturing of EV batteries, especially cobalt, lithium and graphite," Usman said.
But she said the growth trajectory might not necessarily be linear because a few other factors could complicate the situation.
"Intensifying geopolitical tensions, with the announcement of wide-ranging tariffs on Chinese EV imports into the US and Europe, could further restrict the ability of Chinese EV manufacturers to access these markets and therefore affect the industry's growth, at least in the short-term, with knock-on effects on Chinese demand for the mineral and metals input for these electric mobility technologies," Usman said.
She noted that in the longer term though, the commercialisation of newer types of EV batteries, such as various types of sodium-ion batteries that require less cobalt, copper and lithium, may have vast consequences for African mineral exports to China.
Christian-Geraud Neema, Africa editor at China Global South Project and non-resident scholar at Carnegie Endowment, said geopolitics remains an important factor behind China's mining acquisition.
"These minerals have both economic or industrial use and defence purposes," Neema said, explaining that the slowdown in the Chinese economy may have impacted certain imports but it will not impact mining imports for China.
"When you look at the profile of all these acquisitions, they're all critical or strategic minerals for China."
Neema said another geopolitical factor is stockpiling. China has been doing that for cobalt though it uses more LFP (lithium iron phosphate) batteries than NMC (lithium nickel manganese cobalt oxide batteries or lithium-ion batteries) in its EV industry.
Yet, he said, China keeps on not only buying, but also producing, more, even though prices are tanking.
"With that, it can maintain prices low and raise the cost of entry for new players," Neema said. "So geopolitics is an important factor."
Yun Sun, co-director of the East Asia Programme and director of the Washington-based Stimson Centre's China Programme, said: "The supply chain disruption due to the great power competition has demonstrated to China the importance of securing the supply of critical minerals and essential metals." She said many of the major deals between China and Africa since last year belong to this category.
Mark Bohlund, a senior credit research analyst at REDD Intelligence, said China has been driving copper demand for the best part of the past two decades, mostly due to the need for copper fittings in new property developments.
But while authorities are seeking to reduce the importance of property development in driving economic activity, he said the demand for copper has simply switched to another industry.
"The need to secure copper supply from overseas has been taken over by the demand for it from the electrical vehicles and renewables sector," Bohlund said.
"High ore grades and relatively unexploited deposits make Africa an interesting prospective for copper investments, with the weaker position of established players also allowing Chinese companies to more easily take a stake."
