Lobito Corridor: A Geopolitical Battleground for Critical Raw Materials

China has been strengthening its presence in South East Asia and South America for years. In southern Africa, the USA and the EU are increasingly looking for a place in the geostrategic scramble for critical raw materials. The construction of the railroad in Lobito, Angola, is an example of the competition for political influence and natural resources in the region.

China has been pushing ahead with its global “Belt and Road Initiative” investment program for ten years. In the meantime, the giant empire has invested an estimated $900 billion in the geostrategic project, primarily in the form of cheap loans – in roads and bridges, airports and deep-sea ports, technology promotion and digital infrastructure. A study shows how many developing countries are unable to repay their loans. China then offers highly indebted governments rescue packages, making them even more economically and politically dependent on Beijing. Europe's response to China's “new Silk Road” is called “Global Gateway,” while the G7 countries under US leadership are calling it “Build Back Better World.” Both support programs promise greater sustainability and better involvement of the local population.

Ninety percent of traded goods are transported across the world's oceans. The “Maritime Silk Road” is therefore an important part of Beijing's megaproject. Of course, China is also interested in gaining access to important raw materials for its own development. To date, China has built, expanded or otherwise invested in over a hundred ports around the world. Chinese companies hold a majority stake in 13 port projects worldwide.

Special economic zone in Myanmar

In Myanmar, for example, its central government and the state-owned Chinese investment company Citic signed an agreement in December 2023 to complete the Kyauk Phyu Special Economic Zone, which was established in 2011, and a deep-sea port in the state of Rakhaing. According to the Chinese Ministry of Foreign Affairs, the project was delayed due to an environmental impact study by an international consultancy firm. Added to this is the escalating civil war, with the junta having lost control in Rakhine State. The infrastructure project, which is 70 percent financed by China, could, if realized, become a trade hub providing links to Africa and Europe.

The government in Naypyidaw is hoping that the port and industrial park project will attract millions of US dollars in investment to Myanmar, provide the state with high tax revenues and promote the surrounding upstream and downstream industries, which, according to the military government, would benefit the entire country. China, on the other hand, is interested in direct access to the Andaman Sea and the many raw materials in the country. In this region of the world, Beijing has already played an important role in the construction of ports in Gwadar in Pakistan, Hambantota in Sri Lanka and Chittagong in Bangladesh. 

Deep-sea port in Peru

Another country, another continent: A Chinese infrastructure megaproject is being built in the once sleepy fishing village of Chancay, creating a direct link from Peru to China. This port for really big ships is being dredged at a depth of 20 meters. The fact that the social and ecological consequences of the project for the village and its surrounding area are serious is simply accepted. The port is set to become the most important transshipment point for containers on the South American Pacific coast. Mining products and agricultural goods from Peru, Chile, Ecuador and Colombia will soon be shipped to China from here. And Chinese industrial products will also be unloaded for the South American market.

Here, too: Beijing wants to secure its supply of raw materials with this major project. Peru is the second largest copper producer in the world; its neighbor Chile is the largest. In addition, the world's largest lithium reserves are located in the salt lakes of the neighboring border region of Chile, Bolivia and Argentina. The state-owned company Cosco, one of the largest shipping companies in the world, is aiming to put the port of Chancay into operation in 2024 – at the same time as the Asia-Pacific Economic Cooperation (APEC) summit, which is taking place in Peru this year. In addition to Cosco, the Swiss commodities group Glencore is also involved in the port project, although the local ownership structure is currently somewhat confusing.

Majority stakes in African infrastructure

In Africa, China holds majority stakes in the ports of Lome (Togo) and Lekki (Nigeria). In order to promote trade and improve access to critical raw materials, Beijing also owns more than 50 percent of the port shares in Kribi, Cameroon, although the massive investments in port infrastructure are causing enormous environmental damage. Not far from the three ports by African standards, the Chinese government has also invested in a huge deep-sea port in Angola.

The idea of the Angolan government and investors is to revive the dilapidated railroad of the so-called Lobito Corridor. Belgium and Portugal had built the line, which meandered through the Congo and Angola between 1902 and 1929. However, the transportation route collapsed during the civil war following Angola's independence in 1975. It has received little attention since then. This changed in 2004, when Chinese companies invested at least $2 billion in the renewal of the corridor.

The EU and the USA are expanding their presence

For over a decade, Beijing has sought to deepen relations with African partners and conclude infrastructure contracts with them. This gives China a big head start in the global race for critical resources. China continues to dominate the global refining and processing of these materials. However, the US and the EU are seeking to expand their influence in the African minerals market. In 2022, a US-backed consortium was awarded the contract to build a new railroad line from the Angolan coast to Zambia.

An initial $1.6 billion will be used to finance 1,500 wagons, 35 locomotives and the modernization of existing railroad lines and port terminals. The Biden administration has pledged a further $2.3 billion for the railroad and the accompanying mining and refinery projects. Congo and Zambia are Africa's largest copper producers. Copper is crucial for the construction of electric batteries, wind turbines and charging stations for electric cars. Angola is also rich in resources and has reserves of 32 of the 51 minerals that are important for green technologies.  

The renewal of the Lobito corridor is a gigantic undertaking by the EU and the USA in order to stand up to China. The timing is favorable: China's investments in southern Africa are declining. The European companies Mota-Engil, Vecturis and the Swiss company Trafigura have been awarded a 30-year concession by the three African governments and have begun work on the expansion of 500 kilometers of rail network and improvements to the port of Lobito. Trafigura has also announced that Chinese mine operators could also use the rail link in future to export via Lobito.

The geopolitical scramble for critical raw materials has long been underway in the Global South. In view of economic and strategic interests, it is to be feared that the poorest local people will once again fall by the wayside instead of increasingly becoming the focus of a sustainable and just transition.