Home Business Politics How this African election could spell trouble for Tesla

How this African election could spell trouble for Tesla

Global supply of precious metals hinge on peace in this unsettled country.

Aleks Vickovich

Digital Editor, Your Money

Few rags to riches stories exemplify the troubles of Africa like the rise of Joseph Kabila.

Born in a small village in what was then Zaire in 1971, a military career led him ultimately to the presidency of the Democratic Republic of the Congo and (in what is unfortunately unlikely to be a coincidence) vast personal wealth.

Like far too many sub-Saharan leaders, Kabila’s reign has become synonymous with conflict and corruption. Researchers at New York University have estimated that the First Family has financial interests in companies, especially miners, worth hundreds of millions of dollars.

Meanwhile the average salary in the DRC is $394 USD per annum, and many Congolese citizens live in unsafe and unhealthy conditions, and some in full-blown warzones.

This weekend, the people of the so-called Democratic republic have an opportunity to exercise that democracy and put an end to the Kabila regime. At least in theory.

DRC President Joseph Kabila waves to cameras, June 30 2016 (AP Photo/John Bompengo, File)

The president himself is not running. In fact, under the country’s constitution, he was meant to step down in December 2016, but was held up by some very unfortunate and unavoidable delays.

But, of course, he has appointed a chosen successor, Emmanuel Shadary, who is the frontrunner ahead of Sunday’s slated polls and will be seen as the continuity candidate.

Despite its name, the country’s process to elect its next president has come under a cloud.

Major opposition candidates have dropped out of the race in suspicious circumstances. The governor of Kinshasa has banned campaigning in the capital city. Thousands of voting machines have been destroyed in a fire.

Indigo Ellis, an Africa analyst at risk consultancy Verisk Maplecroft, told the BBC that whatever happens this weekend, it is unlikely the Congolese people can trust the outcome.

“Any result is going to be unfair and contested,” she said, going on to predict a high likelihood of conflict.

It is an old and sad story for troubled African nations. And one that has drawn the attention of some of some major global corporations.

Miners and minors

Apart from the allegedly sketchy dealings of its government – and being the location of the historic Rumble in the Jungle boxing match between Muhammad Ali and George Foreman – DRC is best known for its vast natural resources.

The DRC is home to an envious honeypot of gold, diamonds, oil and copper, which makes it also home to a number of multinational mining conglomerates.

Hannane Ferdjani, a senior journalist and anchor at Africa News based in the DRC-neighbouring Republic of the Congo, says these mining firms therefore watch Congolese politics closely.

“The [DRC] election [will be] of keen interest to international mining companies, which are in dispute with the government over a new mining code passed this year,” Ferdjani told YourMoney.com.au.

In his recent post-constitutional presidency, Kabila has not been afraid to make powerful enemies of these foreign interests.

His regime has passed a new mining code which has increased taxes on foreign miners and consolidated market share for state-owned and affiliated operations.

According to Ferdjani, informed sources believe Kabila’s likely successor will continue this “hard line” when it comes to the mining sector.

Oil companies and goldminers are used to doing business in these kinds of unstable places, but the political situation in DRC is also affecting some less risk-tolerant players: technology giants.

In addition to the listed resources above, DRC is also the world’s largest producer of cobalt – a magnetic metal whose stock is likely to rise in coming years.

Apart from being a common additive to roof tiles, and an occasional cancer treatment, cobalt is one of the key ingredients in mobile phones and lithium batteries, which makes it a major ingredient in the success of big brands like Apple, Panasonic and Tesla.

A man carries cobalt on his back in the Shinkolobwe mine in southeastern DRC. (AAP/AP Photo/Schalk van Zuydam)

The sensitivity around the election and violence in the country are not the only reasons these companies are paying attention.

An investigation by Amnesty International earlier this year found that some of these cobalt mining operations – many of them controlled by anti-government rebel forces – have been recruiting and utilising child labour, with reportedly tens of thousands of children working illegally in cobalt mines.

As a result, Tesla in particular has been vocal in pushing for moves away from dependency on DRC-originated cobalt, prompting similar moves by Panasonic and others.

Tesla’s controversial founder Elon Musk told analysts he plans to get the company’s cobalt use to “almost nothing”, according to Bloomberg.

Given the unethical cobalt mining practices going on in the DRC – as well as a string of PR issues for Tesla in recent months – it is understandable that these brands want to disassociate themselves.

But not all engineers and technologists are so sure. And nonetheless, the perennially lucrative outlook for cobalt, and DRC’s near-monopoly on the metal, means opportunistic companies and investors around the world will no doubt continue to be attracted to the region, despite the obvious risks.

Cobalt is a major ingredient in lithium batteries used in electric cars such as Tesla’s. (iStock.com/Tramino)

In the short term, it is the Congolese people who face far more harm than the reputations of faraway corporates. This coming election will have a very real impact on millions of lives.

“The central and eastern region have been marred with violence and multidimensional conflict for years and the current governing bodies have not been able to mitigate the social impact of the violence, which has seen thousands of people displaced,” Ferdjani says.

“If the next leaders don’t address this crisis in an effective manner, things could take a turn for the worst in those parts of the country.”

The history of this region has been anything but smooth and, sadly, ample natural resources have more often been a burden than boon for the everyday citizens.

Let’s hope the rise of electric cars and other consumer goods utilising African resources can increasingly be a source of peace and prosperity, rather than pain and poverty.

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