Friday, April 12, 2024

Lobito Corridor vs TAZARA: The impending China-West Critical Minerals War

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Is the West closing the stable door after the Horse has bolted?

By Mwansa Chalwe Snr

The United States and the European Union’s enthusiasm to construct the 1,300km railway from the Port of Lobito in Angola to the border town of Lua, and another 400km in DRC to the mining town of Kolwezi one hand; and China’s plans to rehabilitate the Tanzania-Zambia Railway (TAZARA), is the clearest sign yet, of the start of President Joe Biden’s 2001 announcement of the US Strategic Competition with China on the African soil.

I see stiff competition with China. China has an overall goal – and I don’t criticize them for that goal. But they have an overall goal to become the leading country, the wealthiest country in the world, and the most powerful country in the World”, Biden told his first press conference in March,2021. “That’s not gonna happen on my watch”.

President Biden remarks were echoed by Senator Robert Menendez, the then Chairman of the Senate Foreign relations Committee, when passing the Strategic Competition Act, 2021, which reset the USA relationship with Africa, among other wide-ranging issues in the Act.

China is strategic competition –not because that is what we want or what we have tried to create, but because of the choices that Beijing has and is making,” said Robert Menendez, a Democrat from New Jersey and the committee’s chairperson. “China today is challenging the United States and international community across every dimension of power –political, diplomatic, economic, innovation, military, even cultural and with an alternative and deeply disturbing model for global governance.” 

These multi-billion-dollar investments should never be considered as benevolent projects by citizens of Zambia, Democratic Republic of Congo (DRC) and Angola. The two power blocks are doing it in their own interests, as part of their geopolitical and economic rivalry for critical raw materials (CRM). It is advisable, therefore, that from the beginning, these African countries make sure that they sign watertight agreements to safeguard their interests.

Lobito Corridor and Tazara Rivalry

On the 7th of February 2024, Chinese Ambassador to Zambia, Du Xiaohui, announced that Chinese investors had proposed to invest over $1billion in the Tanzania-Zambia Railway Authority (TAZARA) under a public private partnership (PPP) model. This was when he was presenting a Project Proposal to Zambian Minister of Transport and Infrastructure, Frank Tayali.

According to available information, China Civil Engineering Construction Corporation (CCECC), a subsidiary of China Railway Construction Corporation, has been appointed by China to negotiate concession to operate the Railway line.

Today we have made progress on the revitalization of TAZARA and direct flight to China. On the rehabilitation of TAZARA, the Chinese, Zambian and Tanzanian people all know that it is an important project for freedom and peace in the new era”, the Ambassador said during a press briefing. “This project is for development and prosperity. Together with the Chinese investors, today we want to present the Chinese description project for revitalization of TAZARA. On the Chinese side, we want to use the PPPs model to invest over $1 billion in the coming years.”

According to reliable sources, TAZARA will be run on similar lines like the Ethiopia- Djibouti Railway, which is using the PPP model through the collaboration of three parties – Governments of Ethiopia and Djibouti, with the railway line run by China CCEC on a Rehabilitate-Operate-Transfer Concession.

In the same week that China was presenting the TAZARA proposal to Zambia, the United States of America and its partners were involved in the Lobito Corridor Private Sector Investment Forum, at the Ciela Resort in Chongwe District, which was convened by the G7’s Partnership for Global Infrastructure and Investment (PGI) and the USA government Agency, International Development Finance Corporation (DFC).The Forum was officiated by President Hakainde Hichilema. It was attended by over 250 business leaders from various countries. And President Joe Biden’s Senior Advisor on energy and investment, Amos Hochstein graced the occasion.

In 2023 alone, the United States announced $1 billion of public investment in the Lobito Corridor across multiple sectors, including rail link upgrade across Angola. That will serve as part of the backbone connective infrastructure, enabling greater regional connectivity and trade with global markets.” Mr. Hochstein said.

Lobito Atlantic Railway (LAR) Consortium has been hired to upgrade the former Benguela rail line across Angola to the border town of Lua.

What is the West’s Motivation for Lobito Corridor?

According to Dr. Wala Chabala, the Western powers’ interest in the Lobito Corridor is to use it to transport critical raw materials (CRMs), strategic minerals and products for the electric vehicles value chain such as batteries from the DRC and Zambia to the EU and the US.

The International Energy Agency (IEA) has estimated that between 2020 and 2040, demand for nickel and cobalt will increase by twenty times, for graphite twenty-five times, and for lithium more than forty times. This projected surge in demand for CRMs has fuelled great interest in the Lobito Corridor, and with it an inevitable scramble for access. The DRC, as the world’s largest producer of cobalt (estimates are consistently around 70% of global production), has found itself at the epicentre of this scramble, as has, by association, Zambia,” He wrote in his analytical essay: Lobito Corridor – A reality Check.

The West’s core interest is, therefore, to use the Lobito Corridor to facilitate the transportation of strategic minerals from DRC and Zambia to the US and the EU. It is part of the geopolitical and economic competition between the West and China. It would be naïve for anyone to think otherwise.

China’s competitive Advantage

In the ensuing competition between the two power blocks, China seems to have several advantages over the West. First, China has the “first mover” advantage. It long foresaw this rivalry coming, and so under President Jiang Zemin, the Forum on China- Africa Cooperation (FOCAC) in 2000 was formed. This was the vehicle for African penetration in all areas of human endeavour. And then under President Xi Jin Ping in 2013, It added with the infrastructure aspect under Belt and Road Initiative (BRI) and pumped in billions for infrastructure projects. Thorough these two vehicles, China has signed several MOUs with African countries, including Zambia and DRC.

It should also be noted that, in the DRC, China has massive mining interests where it controls most of critical minerals including Cobalt. It is clear from this analysis is that the West are close to 20 years behind China in Africa. Whilst they were busy fighting Wars on Terrorism in the 2000s, China was busy consolidating itself in Africa. The physical structures in terms of roads, bridges, airports, railway lines, stadiums, hospitals, power stations etc which are all over Africa, do tell the story.

As alluded to above, China has also revived its interest in Tanzania Zambia Railway Authority (TAZARA), which it wants to rehabilitate. The revitalization of the line should not take too long compared to building the Lobito Corridor whose work is expected to only start in 2026 and completed in 2028.

In terms of EV and battery value chain, the Chinese government has implemented various policies and incentives to support the development and adoption of electric vehicles and battery technology. China has made heavy investments in research and development (R&D) related to EV technology and battery innovation. It follows, therefore, that China’s combination of government support, manufacturing capacity, access to raw materials, vertical integration, and market dominance has positioned it as a global leader in EV technology and the battery value chain, giving it a competitive advantage over rivals in the EU and USA. China happens to be the World’s largest producer of batteries for electric vehicles.

According to Economic Policy and Strategy Consultant Dr. E.D. Wala Chabala, the US and EU may have entered the race for CRMs a bit too late.

The reality of the Lobito Corridor development is that it may be coming too late in the day. This is certainly true as far as transporting CRMs to the EU and the US is concerned since most of the supply has already been locked in by China. With the EU and the US lagging in terms of EV technology, it is highly likely that the DRC and Zambia will end up looking to the East for the capacity and capability building of EV battery value chains.”

There are several areas that the West can compete and beat the Chinese in Africa. But they need to engage African experts to tell them what those areas are, rather than come with a patronizing and a pre-conceived mind set with a know-it-all attitude, as in the past. The ball game has changed, and a bit of humility by Western power will do them a lot of good.

Lobito Corridor potential Benefits to Zambia

Zambia is one of the 16 landlocked countries in Africa.The importance of the transport infrastructure especially the railway line, cannot be underestimated. It follows, therefore, that the potential benefits of the Lobito Corridor railway line, which establishes a vital link of connecting Zambia to the Atlantic are immense.

The infrastructure development promises to modernize transport logistics, facilitate trade, and attract investments across various sectors including agriculture, manufacturing, renewable energy, and tourism. President Hakainde Hichilema was very excited about the project because he believes it has many potential benefits to Zambia.

The Project is not just about the railways but other sub-projects along the way, and it shall open up the hinterland rural communities to modernity since they will have access to telecommunication connectivity, power and roads,” he said when addressing his audience.

The Lobito Corridor has another potential benefit for Zambia in terms of lower fuel prices, as Energy Expert Dr. Johnstone Chikwanda disclosed in an interview with Zambia Daily Mail. Dr. Chikwanda believes that the Corridor will help unlock trade in petroleum products from Angola.

This Corridor will also serve as the harbinger for unlocking trade around petroleum products as Angola still remains with one of the biggest oil reserves on the continent which will assist to lower the fuel prices once we start tapping into the same”, He told the Zambia Daily Mail.

Conclusion

In terms of who Zambia and DRC should partner with in the EV and battery Technology manufacturing, it is a no brainer – it should be Chinese companies. Chinese companies are the global market leaders. They can set up manufacturing facilities very quickly, as they are not as risk averse towards Africa, as their Western counterparts. The African American US Congressman, Gregory Meeks, once bemoaned the negative attitude of Western companies including US Companies towards Africa.

Whether it is an overestimation of risk or an unfortunate miscalculation of the value of the African market, America trails global partners and competitors in forging investment and commercial ties with Africa. Africa has been starved for capital, yet its continued development requires massive investment in infrastructure, energy, and food production,” he lamented in 2021.

The Lobito -Tazara rivalry is just the tip of iceberg of what is to come. This Author foresaw this rivalry three years ago and documented it in a book. Africa is well advised to prepare for the two power blocks competition and figure out how to handle it for its benefit. It all began with debt restructuring, and now its trade routes and strategic minerals, what will be next?

The areas of rivalry will keep on increasing. African countries individually, and the AU as a collective, should devise strategies to manage this 21st Century challenge. One hopes that Africa has learnt lessons from the devastating effects on the continent of the Cold War, and ensure similar mistakes are not be repeated.

Zambia and Africa should remember this: smart people learn from their own mistakes, wise people learn from their own mistakes and those of others, and foolish people learn from neither.

The writer is the Author of “China- West Battleground in Africa: Debt Ridden Zambia (2021)”, Available on Amazon.com and online in the USA Library of Congress as well as the United Nations HQ Library ([email protected])

5 COMMENTS

  1. A very well articulated article, examining the merits and demerits of each of the routes. The three countries stand to benefit in one way or another. What is now required is more than just politically-inclined policies around this. It must be the drive to ensure that national interests are protected in these countries. In time we will have the capability to create value-addition industries will derive benefits from these enhanced transport linkages and the very reason they are being touted: the CRMs.

  2. When two elephants, West and East, are fighting for dominance the grass must look greener, not suffer. What are the benefits of Lobito Corridor for Zambia?
    Nchanga mine, in Chingola; Kansanshi and Lumwana mines, in Solwezi; Kalumbila mime‚ in Kalumbila district will all be connected to the Lobito via Jimbe to join Bengwela tracks. Kavindele must smile because his North-Wesrern Railways is taking the Zambian side of the Lobito line. Our Zambian roads will also smile due to reduced haul loads.
    No immediate need for the Lobito petroleum pipeline as the rail wagons can ferry our fuel energy cheaply.

  3. “….In terms of who Zambia and DRC should partner with in the EV and battery Technology manufacturing, it is a no brainer – it should be Chinese companies. Chinese companies are the global market leaders…”

    There is a small problem with this conclusion…….

    The west will not allow any Chinese EV batteries into their markets for fear of being swamped…….

    Zambia should play both west and China to our advantage. Let both of them invest in EV batteries.

    On TAZARA……..

    just let the Chinese run the thing……..we have failed.

    • It actually does not matter whether those power batteries are consumed by the US or not. I stand by the all weather friends. If it was not for the Chinese most of the third world Africa would not have had access to smart phones, for example. When the West denied Zambia the CapeofGoodHope route, China provided the way with Tazara. The Chinese EVs are more economical than the Western brands. African hope is much in Chinese versions. But I agree with #Kaps that we must play it safe in balancing our relationships.

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