From Rubber to Minerals: The DRC Deserves Better

Executive Summary  

This essay will utilize the shared patterns of innovation between Lithium Ion-Batteries and Battery Electric vehicles through Rothwell’s coupling models to find the strategic linkages within global value chains. The takeaways will create policy proposals and reforms within traditional trade routes that can benefit local communities in the Democratic Republic of the Congo.

 In breaking the two technologies into processes and product innovation through the Pavitt taxonomy, we can compare their integrated global value chain in real time to see the economies of scale, complementary assets, and risks involved in the extraction, production & manufacturing of renewable energy storage devices, and their applications in innovative technologies like electric vehicles.

 As the market demand for the two technologies continue to increase with global trends to mitigate climate change, those involved in the value chains of the technologies will experience favorable returns on investment. If organizational systems form a historical perspective can build collective efficiencies between incidental economies & clusters, the benefits can be less concentrated and more evenly dispersed (Guiliani, Pietrobelli, Rabellotti, 2005).

 To ensure responsible consumption and production patterns, pathologies of technology in modern engineering bring light to the normative frameworks that create artificial functions for technologies as gadgets, and fail to see it’s wider relationships to inequalities, systems, and individuals (Nightingale, 2004).

Introduction

Most of the worlds Cobalt is mined in the Democratic Republic of the Congo (DRC) (Deberdt,2021), and 46% of its revenues as well as 99.3% of its exports come from the extractive sector (EITI, 2022). With market prices of cobalt and other rare earth metals set to skyrocket over the next 30 years as the world transitions to renewable energy sources (Gent, Busse, House, 2022), the economy of the DRC has potential to capitalize on the energy transition by incentivizing Multinational Cooperation (MNCs) and International firms to invest in technology learning outcomes in local economies. This could build up the institutions and infrastructures of the Congolese government and create avenues for local development that diffuse across social and technical systems. The traditional of trade liberalization in neoclassical economic models has not worked within many African nations, due to a lack of reciprocity and a heavy uptake in greed and corruption - resulting in what many economists refer too as the ‘Resource Curse’ (Hoschild, 1998). Foreign Direct Investment floods the economy with accelerated growth and consumption that cannot be sustained, and thus leads to a dependence on cyclical boom and bust cycles, authoritarian/unresponsive governments and ineffective social policies. Perhaps a shift from liberalization to supply chain trading could benefit the Congolese National Systems and build technical capabilities and knowledge transfer more efficiently and aid in its diffusion (Baldwin, 2012).

Currently, under traditional trade liberalization policies and frameworks, close to 70% of refined Cobalt in global markets is controlled by localized technological capability developed within China (Pistilli, 2022). Despite almost 69% of the global supply of cobalt coming from Congo, Chinese Private and Public Enterprises hold a comparative advantage in the industrialization of the raw materials and have created intermediate supplies of pre refined cobalt within the Congo (Gulley,2022). This creates an unproportionate division in the profits from the global value chain that does not incentivize the sharing of wealth.

 By utilizing the patterns of innovation of technologies that benefit from the global supply chains of cobalt, which consist of but are not limited to lithium-ion batteries (LIBs) & battery electric vehicles (BEVs), there is a way to strategically build linkages within global systems that can foster relationships between the Congolese state and MNC’s. There is no greater incentive for cooperation than saving the world, and these value chains hold the potential to affect several SDGs indirectly and directly. If linkages can create shared value and investments can successfully transfer knowledge to global communities, there is potential to (1) reduce poverty globally, (8) create descent work, (10) reduce inequalities within and among countries, (9) Build resilient infrastructure and (12) create responsible consumer & production patterns as well as (7) create affordable and clean energy (UN, 2022).

 Lithium-ion Batteries (LIB)

In the year 2000, the world cobalt market shifted to chemical production of cobalt to feed the performance and longevity of lithium-ion batteries (Gulley, 2022), as it’s crucial to the electro chemical reactions with LiMO2 (lithium metal oxide) in the layered oxide cathode (Gent, Busse, House, 2022). Around that same time Chinese firms were rapidly expanding their process innovation of cobalt chemical refining for battery cathodes to support the strategic emerging industry of battery manufacturing” (Gulley, 2022). State owned firms in China focused on incremental processes of innovation to build their technical capabilities in less radical innovations within the value chain (Freeman, 1995).

 Chinese firms were able to utilize the increasing complexity of science and the simplification of technology over the next 20 years (the era of modern engineering) to create a tacit knowledge base from the socially embedded complex material culture that came with the increased awareness of climate change (Nightingale, 2014). This allowed them to create an increasingly complex product that reflects the artificial functions assigned to our material and social environments (Nightingale, 2014). These environments are constantly changing and evolving based on newly assigned meanings, this evolution can create feedback loops to build increased technical capacity to experiment and learn (Freeman, 1995).

By utilizing Rothwell’s coupling model, we can see that Chinese firms found a balance between technological capabilities and the needs of the market, and they now make up 56% of EV battery production (globalvehicleinfo, 2022).

 Battery Electric Vehicles (BEV)

 In 2016 the Paris agreement declared that all nations signed on are legally required to put forth initiatives that see the mitigation of global warming be reduced to well below 2 degrees Celsius compared to preindustrial levels through 5-year cycles of what is known as Nationally Determined Contributions (NDC) (UN, 2022). Global strategies for the reduction of CO2 in the developed world and developing world under trade liberalization have put BEV’s at the center of their contributions to reducing CO2 production (Yozwiak, Carley, Konisky, 2022). The Canadian government recently published the Electric Vehicle Availability Standard, which obligates manufacturers and distributors to electrify 20% of their fleets by 2026, with that percentage increasing to 60% by 2030.

Most automobile manufactures in 2022 have already started producing BEV’s at competitive prices to meet Nationally Determined Contributions as per the Paris Agreement. Manufacturers have already established path specific knowledge of the automobile and have translated it to their technical capabilities in: In House R&D, specialized manufacturing, and supply chain links to components. This allows large car manufacturers to focus their energy on finding innovative and creative ways to increase the performance (range) of their vehicles. Simultaneously, most manufacturers will still need to focus on maintaining an affordable price, as affordability is a large factor in the uptake of EV’s over the next 15 years. Newer components like the electric motor and battery create a bottleneck in both process and product innovation, as leading manufacturers in BEV’s like Tesla, Mitsubishi & Volkswagen still receive in part, a supply of lithium-ion batteries or components from suppliers like CATL, a privately owned Chinese firm, which currently holds 34% of the market share in EV battery production(globalvehicleinfo, 2022). CATL is also the second largest share holder in one of the DRC’S largest Cobalt and Copper Mines, Tenke Fungerume due to a joint partnership with CMOC, a Private Mining company with 80% ownership of the mine. Pretty sure I read somewhere that Monopolies are bad for competition and result in an unequal distribution of resources and predatory behaviour (Macdonald, 2022) resulting in an absorption of of excessive profits, control of market, and higher prices for consumers.

It would be wise to increase both the output and performance of BEVs without the high price tag by building interlinked global economies through organized exchange agreements and technology imports from CATL (Freeman, 1995). In less political speak, CATL needs to diffuse their technological and scientific capacity and decentralize streams of innovation for the greater good. The Paris agreement can be used to incentivize global and local policy changes in nations to build on SDG (12): responsible consumption and production patterns between suppliers and producers of both technologies (UN, 2022). This would create thick labor markets from shared infrastructure in skilled labor, & profits, creating dynamic linkages that would incentivize diffusion of social and technical innovations across manufacturing processes and In-House professionalized R&D  (Freeman, 1995)

Comparisons and Linkages between BEVs and LIB

The extraction, processing and distribution of cobalt will be crucial to the inputs of LIBs & BEVs, which creates conditions specific to building meaningful linkages between producers and suppliers within the value chain (Giulani et al, 2005). Diverse knowledge sources from internally (firms) and externally (DRC State, creseures, and local community) could steer cooperation through pursued joint action that benefit incidental external economies and create collective efficiency between automobile manufacturers, mining firms and Chinese monopolies in lithium-ion battery production, as well as other suppliers of component parts to in energy products (Giulani et al, 2005).

 A comparison between the patterns of innovation and shared complementary assets between Battery Electric vehicles (BEVs) and their power source, lithium-ion batteries is illustrated using the Pavitt Taxonomy. Comparisons show the political and economic pathways of innovation between two technologies. This is the steppingstone to building an increased critical understanding of organizational complexity within the global value chain to augment responsible policy making efforts (Rothwell, 1992)

 Firms involved in the extraction & refinement of cobalt, the manufacturing of lithium batteries, and the production and innovation of BEVs have the potential to build competitive advantage in global markets, and if done responsibly and ethically, a diffusion of technical knowledge transferred across value chains can directly contribute to Sustainable Development goals; (10) the reduction of inequalities within and among countries, (1) the alleviation of poverty , (9) the building of resilient infrastructure that promotes inclusive and sustainable industry & (8) access to descent work and a living wage (UN, 2022).

As systems grow, there is not a guarantee they will move at the same rate or in the same direction, so it would be wise to find the components within the system that advance faster than the others (Rosenburg, 1969). In this case, the layered oxide cathode within LIBs requires the production of refined cobalt and as seen in the historical examples, they advance faster than other components. Rosenburg refers to these components as focusing devices that can generate larger benefits if exploited correctly. So, in combining National Systems with Interlinked economies of MNCs, focus can be assigned to the saliency of cobalt cathode refinement to create a system in which technical and organizational components begin to manually adapt to each other and create directional momentum (Rosenburg, 1969). This could allow local communities in large mining sites across the DRC to diffuse technical and social innovations for their benefit. Heterodox economics if applied in this national setting could lock technologies into trajectories of change that maximize scale/cost advantage & increased returns on investments that can be invested to supporting the building of infrastructure (Hughes, 1987 & Rosenburg, 1969). This infrastructure could build strong institutions to support continued technical change in renewable energy sectors – one where there is a clear global market for the technologies.

By adapting already developed processes and technologies involved in the refinement and processing of cobalt, and importing them into the DRC, there is an ability to alleviate the suffering caused by traditional trade & “liberalization of infrastructure, financial services, capital flows, & barriers” (Baldwin, 2012) that originate from neoliberal structures.

Discussion and Conclusion

 It’s important to note that the technology itself provides clean energy, but its component parts have significant environmental hazards that must be addressed by policy makers to mitigate harmful effects and create responsible consumption and production patterns. Ironically, the largest contributor of environmental effects generated from the mining of cobalt is the burning of fossil fuels generated from coal to create electricity for the process (Farjana, Huda, Mahmud, 2019). What’s that say about our priorities? The extraction of rare earth minerals contaminates ecosystems, displaces communities and creates health issues – all in the name of building renewable energy technologies. The cognitive dissonance is so apparent, yet somehow the most intelligent of us can’t bear to do anything about it because we’re so used to exploiting resources from the Global South that it’s just business as usual. One would think that the country providing so much capital to foreign national would at least receive a reinvestment in clean energy, let alone the communities see some of the revenue their soil and labour generated. The lack of investments in domestic infrastructure by foreign companies in Congo tells us all we need to know about their agenda. The next time we praise Bill Gates or Jeff Bezos for their efforts in the transition to Renewable Energy, lets remember that instead of investing in infrastructure, community, and revitalization in the Congo, they invested heavily in Kobold AI, a billion dollar artificial intelligence start up dedicated to finding new mineral deposits across the world. Strategically a genius move, seeing as all the new rare earth mineral sites in the next 30 years would be owned in part by them. But then we go back to the comment I made earlier about monopolies. Stifling competition and controlling the market only reinforces the status quo: to make the rich richer at the expense of everyone else.

Without creating links to domestic systems to maximize wealth distribution then our work to a more sustainable future is in vain, as we are not maximizing the diffusion of social and technological innovations. Environmental and social hazards are exacerbated by foreign companies with incentives for lower labor costs in the Congo, and as recently as June of 2019, more than 40 creuseurs (diggers) were killed in Kolwezi from a collapsing mine owned by Swiss company Glencore due to a lack of mine fortification (Niarcos, 2021). In 2017 mining rights of a Chinese owned mining firm; Congo Dongfang, illegally evicted families in Kasulo by destroying their houses to progress their mining efforts (Niarcos, 2021).  

https://www.instagram.com/reel/C0zZZluuFrD/?igsh=bWM1N2JsOGcycjB6

^A depiction of the conditions in artisanal mines^

These events are an example of the wider issues in global supply chains and their ignorance to human rights and environmental issues. Nightingale’s first pedology of technology as merely ‘gadgets’ illuminates the separation from its relationship to complementary devices, & institutions – allowing a disconnection between the technologies of LIBS AND BEVS and their association to external environments of social relations between nations, firms, and people (Nightengale, 2014).  The status and glamour associated with consumer products allows for a separation of the product from its colonial origins.

Policies in local, national, and international levels MUST address these human and environmental rights issues through the creating of transparent external linkages to public and private institutions in sciences and human rights & the MNCs through a series of checks and reports. This would allow the development of accountability in policy, forcing parties involved in the profiting of extraction and production to mitigate their external harms scattered throughout systems of ‘sustainable technological  innovation’ and development.

A large push to electrify consumer vehicles is undoubtedly one of the most publicly accepted methods to meeting sustainable development goals (Yozwiak et al, 2022). Linkages and investments both internally and externally in the Supply chain of batteries and their development can create national and international policies to transform inequalities through responsible consumption and production patterns. This, I believe is the key to creating affordable and clean energy ethically, helping to not only create linkages between systems and sectors, but create efficient pathways to realizing goals 1, 8, 9, 10, 7, and 12 – converging to build partnerships for goals (17). The extraction, processing and distribution of cobalt will be crucial to indirectly contributing to several of the UN’S Sustainable Development Goals considering its mass use cases in the global energy transition. By focusing on the national systems of innovation within the Congo, and its linkages to MNCs, there is potential to build active cooperation through pursued joint action that benefit incidental external economies and create collective efficiency between suppliers and producers of the technological components contained in lithium-ion battery technologies (Guilani et al, 2004). 

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