Key facts
- China has suspended Zijin Mining's $4 billion acquisition of Allied Gold.
- The acquisition was paused to scrutinize potential risks, particularly security concerns.
- Allied Gold's Sadiola mine in Mali is located in a region facing jihadist insurgent attacks.
- The deal's deadline has been extended to July 29.
- China's move suggests increased wariness about the security costs of its global investments.
China's extensive investments in Africa's critical minerals sector are facing increased scrutiny due to rising security risks, as evidenced by the suspension of Zijin Mining's planned $4 billion acquisition of Allied Gold. The deal, which includes significant assets like the Sadiola mine in Mali, a region plagued by jihadist insurgent activity, has had its agreement extended to July 29. This move signals a growing wariness in Beijing regarding the security costs and potential dangers associated with its overseas ventures.
China has established a dominant position in the global critical minerals market, controlling over half of the production and an estimated 87% of processing and refining. This dominance extends to key minerals like rare earths, magnets, cobalt, lithium, and copper, which are vital for electric vehicles, defense systems, and advanced technologies. Chinese companies have strategically acquired major mining assets across Africa, including in Botswana, Mali, and Tanzania, and secured long-term supply agreements, such as BYD's acquisition of six African lithium mines.
This strategic control allows China to leverage its position by limiting exports to competitors and potentially weaponizing its refining capabilities. The Belt and Road Initiative further solidifies China's influence through infrastructure investments linking mineral resources to global shipping lanes. Despite Africa's rich mineral reserves, the continent often remains at the bottom of the value chain, with countries like the Democratic Republic of Congo (DRC) exemplifying the paradox of mineral wealth alongside poverty and conflict.
In the DRC, Chinese firms like CMOC, Sicomines, and Zijin Mining are dominant in cobalt production. However, this presence is associated with strategic risks, including integration with armed groups and perceptions of political co-optation due to opaque deals and elite pacts. Community unrest in mining zones also presents a challenge.