ES #129: The DRC & Outsourced Energy Security

Energy Shots #129:

M23 rebels in the Congo River Alliance captured several cities and made unprecedented territorial gains in the Democratic Republic of Congo’s mineral-rich eastern provinces in the first three months of 2025, the latest development in a multi-decade regional conflict that puts approximately 73% of global mined cobalt and 10% of global mined copper supplies at risk of geopolitical disruption.

While Qatar-brokered ceasefire talks between the Rwanda-influenced M23 militia and the DRC government remain fluid, 2025’s territorial concessions and increasingly concentrated Chinese control of Congo’s mining industry prompted DRC officials to extend a Ukraine-style minerals-for-security proposal to the Trump administration in February.

Approximately 80% of the DRC’s cobalt mining operations are majority owned or operated by Chinese entities, and Congo followed its offer to the U.S. with successful interference on a deal that would have seen Trafigura-backed cobalt and copper producer Chemaf Resources sell itself to China’s Norin Mining later this year.

Critical Minerals v. U.S. Energy Security

Conditions in the DRC are a microcosm of the broader struggle across Africa, South America, and developing Asia between G7 and BRICS members for the critical minerals required for ‘clean’ energy technologies like battery storage, EVs, photovoltaic (PV) solar, and wind turbines.

According to the latest data, the Democratic Republic of Congo accounts for 73% of annual mine production of cobalt and is home to 55% of global cobalt reserves.

China’s consolidated influence over the DRC’s mining industry, however, ensures the majority of Congo’s cobalt output is ultimately processed and exported from China.

According to 2023 data, China accounts for nearly 77% of global refined cobalt supplies or 11x as much as second-ranked Finland, giving China majority control over 55% of the global electric vehicle market that uses cobalt-based battery chemistries.

As shown below, batteries are the primary source of global cobalt consumption, accounting for 76% of annual cobalt demand.

While Tesla and some EV/grid storage manufacturers are in the process of migrating battery chemistries away from cobalt to lithium-ion phosphate (LFP), the DRC-M23 conflict emphasizes the knock-on energy security risks lurking in the resource composition of the U.S. interconnection queue.

• Over 90% of the planned generation resources in the U.S. require foreign critical minerals like cobalt, graphite, lithium, and rare earth magnets.

Takeaways

Reliance on foreign-controlled critical mineral supply chains, particularly those exposed to conflict-related disruption in developing regions, invites knock-on risks that extend throughout the U.S. energy sector.

Lagging effects of IRA incentives will push these risks into the U.S. interconnection queue, as more than 90% of planned generation projects rely on critical minerals in non-U.S.-controlled supply chains.

Regional resource availability determines energy security, as shown by China’s long-term efforts to mitigate dependence on oil imports through the Strait of Malacca by shifting energy systems to domestically-sourced materials like coal, solar, wind, and batteries that can tap into China’s dominant critical minerals production.

See you next Sunday.

ES.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation concerning the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is intended for Mobius clients only and is not considered promotional material.