"Moving up" in the global battery value chain

Abstract

The Democratic Republic of Congo (DRC) is endowed with vast reserves of cobalt, a metal playing a very substantial role in the global energy transition. As the world shifts towards sustainable energy solutions, particularly through the electrification of transport, the demand for key minerals like cobalt and lithium is rising. This presents a unique opportunity for the DRC to elevate its position within the global battery value chain (GBVC). However, despite its rich mineral resources, the DRC’s current role remains limited primarily to raw material exports, leaving significant space for growth in high value-added activities.

This thesis explores the research question: “Can the DRC leverage its abundant cobalt resources to upgrade in the battery value chain?”. The study aims to bridge the knowledge gap by assessing the potential of the country to upgrade within the chain. This is done by identifying challenges that the DRC faces and exploring opportunities for upgrading within the value chain.

The research is structured around several sub-research questions that examine the global landscape and governance of the battery value chain, the DRC's current integration, and both the challenges and opportunities for future upgrading. The primary analytical tool employed is the Global Value Chain (GVC) framework, which provides a structured methodology to assess the complex network between the companies and the economic activities that are executed throughout the world. By applying this framework, the study identifies where value is created within the battery value chain and how the DRC can move towards higher-value activities.

In summary, the opportunity identified for the DRC is in the upstream sector of the battery value chain and more particularly in the refining stage. Nevertheless, the outcome is not encouraging for the DRC due to substantial barriers that the country must overcome. The country faces deficits in infrastructure, especially in energy and transportation systems, which rise operational expenditures. This in conjunction with the political instability has a negative implication on the attractiveness of the DRC as an investment environment, so country ‘s progress is hindered. Furthermore, the limited control that local institutions have over cobalt mines does not give the chance to the DRC to take strategic decisions that are beneficial for the development of country ‘s capabilities. In addition, transparency and human rights problems within the mining sector make investors more reluctant due to the need in the market for compliance with international ESG standards.

Substantial improvements in the DRC ‘s investment environment are necessary to strengthen country ‘s position in the global battery industry, so some recommendations for both government policies and corporate strategies are made. Local institutions should build more strategic collaborations with companies in other countries of African Union that have the capacity to support refining activities. At the same time, they must increase their awareness for international standards and start applying them in order to become more trusted partners globally. Policy recommendations from the government are also essential , including financial incentives for foreign investors and improvements in the judicial system. In this way, the DRC can create a more competitive environment in the refining segment of battery value chain and may have more chances for upgrading.