Challenges to a domestic battery industry in DR Congo and Zambia

Since 2021, the Democratic Republic of the Congo (DRC) and Zambia have taken steps towards establishing a regional battery value chain, seeking to move from extraction towards higher-value production such as battery precursors and, ultimately, batteries themselves. Energy, transport and skills are rightly seen as key success factors. But other key variables often receive less attention in policy discussions: direct state participation and strategic oversight of investment decisions in the mining sector.

Patience Mususa, The Nordic Africa Institute & Michel Shengo, University of Lubumbashi

Across Africa, value-addition strategies have produced mixed outcomes. Botswana’s policy External link, opens in new window. to process diamonds locally instead of exporting them raw and Tanzania’s tanzanite reforms External link, opens in new window. demonstrate that progress is possible, at least in part. By contrast, Nigeria’s Ajaokuta Steel Complex External link, opens in new window. and Ghana’s long-running ambitions for an integrated aluminium industry External link, opens in new window. illustrate how industrial projects can stall despite political commitment. Explanations typically focus on infrastructure gaps, limited technical capacity and weak innovation systems. Yet these discussions often miss: who has the power to decide whether, when and where to invest in downstream capacity – and if those incentives match government industrial policy objectives. In the Central African Copperbelt (CAC), where private ownership predominates, these questions are central to whether battery industrialisation could be more than aspirational.

State participation in CAC’s mining sector

The CAC, a cross-border region spanning DRC and Zambia, is one of the world’s most important sources of copper and cobalt, minerals that are indispensable to the global green transition. In both countries, the state once exercised far greater control over the mining sector External link, opens in new window.. From the late 1960s until the 1990s, state-owned enterprises – Gécamines in DRC, and Zambia Consolidated Copper Mines (ZCCM), respectively – dominated the sector. The state was not only a regulator, but also a direct economic actor and strategic owner, shaping investment priorities and channelling mineral rents into wider welfare systems and infrastructure. In DRC, state control of the mineral sector led to the establishment of extensive public health and education systems External link, opens in new window.. In Zambia, ZCCM’s corporate welfare system supported public services, housing and urban infrastructure, and underpinned the emergence of a sizeable middle class in the Copperbelt.

This model began to unravel in the 1990s, when both countries faced fiscal crises and external pressure for liberalisation and privatisation. Mining sector “reprivatisation” followed: state companies were recapitalised through foreign investment, and ownership and operational management increasingly shifted to private actors. In Zambia, a new investment framework introduced in 1995 meant the state could sign development agreements with private companies. Between 1997 and 2000, Zambia entered contracts External link, opens in new window. that granted favourable terms to investors, such as reduced royalties and long tax breaks – often under opaque conditions.

In DRC, mining reforms accelerated under the presidency of Joseph Kabila after 2001. The 2002 Mining Code aimed to attract foreign direct investment, and from 2003 the state sold majority stakes in many holdings, creating a mining landscape dominated by joint ventures where the state retained minority shares. Over time, Gécamines’ stake in key copper and cobalt operations diminished substantially. Critics argued that privatisation had become a process of expropriation under the cover of policy reform, contributing to what is sometimes described as a “raid” on Katanga Province’s mineral wealth.

Why ownership matters for value addition

The push for a regional battery industry is often framed in terms of industrial policy, infrastructure and skills. But most policies miss the impact that a diminishing state stake has. Limited state ownership weakens the ability of both DRC and Zambia to steer their mineral economies towards beneficiation and downstream industrialisation. Where private corporations dominate, incentives often favour rapid extraction and export of minimally processed ores rather than long-term investment in domestic refining, industrial linkages or local technology ecosystems. State ownership can also contribute to fairer redistribution of mineral resource revenues External link, opens in new window., improved welfare outcomes and the emergence of a more affluent middle class, which, in turn, can strengthen the local economy through consumption and taxation. It can also address concerns about tax avoidance through schemes such as trade misinvoicing External link, opens in new window.. Strong state ownership is more likely to support successful beneficiation strategies in countries with stronger governance, including effective rule of law, robust anti-corruption safeguards and sound public financial management.

The World Bank, previously an advocate of privatisation, began to concede that state-owned mineral companies can also be competitive.

Arguments against state ownership in African mineral sectors often point to historical low productivity and growth in nationalised mining industries. They tend to overlook the impact of global economic stagnation in the late 1970s and 1980s External link, opens in new window., and how it affected commodity pricing and production. Additionally, they cite governance issues to dismiss the idea of African stewardship. This is despite growing investment by state-backed multinationals from China External link, opens in new window. and the Gulf countries External link, opens in new window. in the region, and US statecraft External link, opens in new window. to secure critical mineral supply chains. However, available evidence suggests that even in lower-governance settings, increasing state participation in mining can still generate welfare gains. Research from Indonesia External link, opens in new window. illustrates how states can increase ownership and strategic leverage over mineral rents, even in governance-challenged contexts. Additionally, the World Bank, previously an advocate of privatisation, began to concede that state-owned mineral companies can also be competitive, issuing guidelines on sector governance External link, opens in new window..

Recent research by development economists promotes resource-based industrialisation External link, opens in new window.. This approach aims to encourage African mineral-rich countries such as DRC and Zambia to shift from exporting raw copper to producing battery-grade materials and supporting downstream industries. Public policy initiatives such as the Green Industrial Development Expert Panel External link, opens in new window. support these objectives, which require effective state presence, both in terms of public coordination and the ability to secure access to mineral feedstock for domestic industry. Swedish mining company LKAB, which has been 100 percent state-owned since 1976, is an example of how long-term state ownership can provide a platform for industrial upgrading External link, opens in new window.. By retaining control over a strategic mining asset, the Swedish government has strengthened its ability to align mineral extraction with domestic value addition and long-term industrial priorities, rather than leaving such decisions entirely to private commercial interests. Japan provides another example of the “security of supply” rationale for state-backed involvement, where government agency JOGMEC plays a strategic role in safeguarding access to critical minerals for Japanese industry, combining public–private coordination with policy tools External link, opens in new window. such as equity participation, loans and guarantees, and stockpiling support.

DRC and Zambia, alongside other African countries have enacted local content policies External link, opens in new window., which if well supported External link, opens in new window. could strengthen economic links with the mining industry, support local businesses External link, opens in new window. and foster equitable partnerships with global multinationals, including state-owned entities. However, this requires actively using state companies to secure better deals and enhance economic ties, which are crucial for developing downstream industries. For instance, the Zambia Association of Manufacturers (ZAM), which includes copper cable producers, has voiced concerns about access to raw materials External link, opens in new window., primarily locally mined copper, and pricing, which is often linked to the London Metal Exchange – prices factor in overseas shipping and warehousing but neglect transport costs within Zambia from mine to plant. ZAM suggests that if the government wants to encourage value addition, especially in its mining assets, it should leverage its holdings to ensure consistent raw material supplies for local industries and promote fair, competitive pricing.

Regaining control over the production and the commodity supply and logistics chain External link, opens in new window. is necessary to build a battery value chain. This does not necessarily mean full renationalisation. Rather, it means systematically renegotiating and – in strategically selected cases – increasing state shares in joint ventures and mining agreements. For instance, DRC and Zambia’s state-owned corporates have both established joint ventures with Swiss trading firm Mercuria External link, opens in new window. to participate directly in global mineral commodity supply chains. Such a strategy strengthens state capacity to capture and reinvest mineral rents into the foundations needed for beneficiation: energy systems, transport corridors, research infrastructure and skills development. Without stronger control over revenues and mineral flows, both DRC and Zambia will struggle to finance these requirements.

Joint standards on taxation, environmental and labour regulations, and responsible sourcing could also help prevent a “race to the bottom”.

Rebuilding strategic ownership must be supported by two complementary actions. First, both countries need a clear understanding of the resources they actually possess. Zambia has been conducting an aerial geological survey External link, opens in new window. as a baseline for further mineral exploration, while the DRC is set to launch its own External link, opens in new window.. But practices and standards for geological surveys, data verification and certification need to be improved to meet international industry standards.

Second, DRC and Zambia should strengthen their bargaining power through deeper regional coordination. A structured bilateral framework, ideally implemented through the Southern African Development Community (SADC), would reduce the risk of external actors negotiating separate, unfavourable deals with individual governments and would improve leverage over pricing, financing terms and investment conditions. Joint standards on taxation, environmental and labour regulations, and responsible sourcing could also help prevent a “race to the bottom” and create a more predictable investment environment. Similar collective approaches have increased negotiating power in other contexts, such as the EU and Opec.

Building trade diplomacy skills

The privatisation of the mining sector in DRC occurred during a period of profound political instability and a weak bargaining position. A Special Commission report External link, opens in new window. to the National Assembly in 2005 reviewed mining deals signed during wartime conditions (1996-2003), finding that many undervalued the value and profitability of mineral assets. The consequence was not simply lost revenue, but a long-term reduction in state leverage over strategic resources. DRC’s experience also illustrates how low state equity can translate into missing commodity booms. When copper prices surged in the mid-2000s, and when cobalt prices rose sharply in 2016-2018, the DRC state captured limited benefit External link, opens in new window.s because key mining rights had been ceded earlier through deals from 1996 to 2004.

In other words, the expertise of national representatives in international negotiations is an important aspect that is often overlooked in mineral-rich countries’ efforts to move up the value chain. Research has examined how Zambia’s economic diplomacy has shaped the development of its mining sector External link, opens in new window., arguing that governments with stronger negotiating expertise and better coordination across ministries are more likely to secure partnerships that advance local value addition, skills transfer and industrial upgrading. Building these capabilities, and ensuring that the recruitment of trade diplomats is merit based, is therefore crucial for successful negotiations.

The new geopolitics of battery minerals

The geopolitical stakes around the CAC have intensified since the early 2000s, particularly due to China’s rapid expansion in copper and cobalt investment, initially driven by domestic industrial demand, and later anchored in China’s role as a major global processor of cobalt. China’s strategic integration of mining with African priority sectors, such as infrastructure and manufacturing, has established it as a key economic player in DRC and Zambia. This continuous engagement underscores China’s influential role in the region. In the DRC, China-linked firms control leading copper and cobalt producers, and estimates suggest that most DRC copper and cobalt outputs are ultimately refined in China. These dynamics have turned cobalt into a strategic concern for the US and its allies, shaping their engagement with DRC and Zambia, including a trilateral memorandum of understanding in December 2022.

Enhancing skills and innovation capacity

To boost manufacturing industries around minerals in DRC and Zambia, investments in skills, innovation and research are as important as investments in “hard” infrastructure. A recent World Bank report External link, opens in new window. emphasises shortages of technical and industrial skills as a key workforce gap. One way to bridge this gap is to build stronger collaboration between universities, government agencies and the private sector, for example through internships and apprenticeships focused on mineral value addition. International development cooperation, such as that from Finland External link, opens in new window. and Sweden External link, opens in new window., also helps to address some of these gaps. However, both DRC and Zambia remain heavily reliant on external support to develop skills in emerging industrial sectors such as batteries. Weak coordination across public agencies has also undermined environmental management in the mining sector in both countries.

Despite fiscal constraints, both governments are already investing in knowledge infrastructure that supports the mining sector. In 2022, for example, the DRC government, in collaboration with UNECA, established the Centre of Excellence for Advanced Battery Research External link, opens in new window. at the University of Lubumbashi; and in 2016, the World Bank selected Copperbelt University in Zambia as an Africa Centre of Excellence for Sustainable Mining External link, opens in new window.. In 2022, the DRC government established the Congolese Battery Council (CCB) External link, opens in new window. to strengthen knowledge infrastructure and support innovation in industrial battery production. More recently, an international partnership has been set up between Stanford University’s Mineral-X initiative, KoBold Metals, Copperbelt University, and the University of Lubumbashi to train experts in artificial intelligence for mineral exploration External link, opens in new window..

State-owned companies such as Gécamines and ZCCM-IH could play a much stronger role in promoting knowledge and innovation. Other public institutions, such as the national electricity companies SNEL in DRC and ZESCO in Zambia, should also – working in coordination with the private sector and universities – play a more proactive role in skills development to meet rising energy demand associated with industrial growth.

Finally, efforts to attract manufacturing investment will only succeed if private-sector innovation is better linked to local research and training institutions. This is vital for industrial ecosystems such as Zambia’s Chibombo Multifacility Economic Zone, which attracts investment External link, opens in new window. in copper cabling and batteries, and the DRC's Musompo Special Economic Zone External link, opens in new window., planned for the production of cobalt battery precusors. Coordinating industry, universities, and agencies such as Zambia’s Industrial Development Corporation External link, opens in new window., and the DRC's Industrial Promotion Fund, is essential to support a regional battery value chain.

Policy recommendations

• Increase strategic state equity in mining assets. Renegotiate selected joint venture agreements to expand state ownership and strengthen public influence over investment decisions, while safeguarding commercial efficiency. Lessons from countries such as Botswana and Chile suggest that state ownership can coexist with competitive business models when governance, transparency and performance requirements are clear.
• Use state participation to support domestic industry. Greater state leverage can increase the government’s ability to align mineral production with domestic value-addition strategies, strengthen resource rent capture, and – where appropriate – support long-term tools such as strategic stockpiles to stabilise feedstock for future industry (as, for example, China and Japan have been doing for years).
• Build collective bargaining power through regional coordination. The governments of Zambia and the DRC should work more closely, ideally through SADC, to improve leverage in negotiations with major investors and geopolitical powers. They should harmonise rules on taxation, labour, transparency and environment to prevent a “race to the bottom” and create a more predictable investment environment.
• Strengthen knowledge infrastructure through direct state support and equal partnerships in international collaboration. Public investment and state-owned enterprise engagement is crucial to build durable capacity in education, research and innovation for mining and industrial development. International collaborations should prioritise mutual benefit, institutional embedding and sustainable knowledge transfer.
• Leverage public entities to support long-term skilled workforce development through apprenticeships focused on mineral value addition. State institutions can use their many interfaces with the private sector to promote workforce development across both sectors.
• Strengthen coordination among state-owned enterprises, public institutions and academia to enhance knowledge sharing, and align efforts towards innovation-driven industrialisation of the mineral sector.
• Build specialised “critical minerals trade diplomacy”. Invest in the skills and institutional capacity of trade diplomats and public negotiators to improve value capture and partnership outcomes. Prioritise training in contract negotiation, value-chain economics and sustainability standards.