The elements of power, p.28
The Elements of Power, page 28
But China seemed to be stronger than even the executive had predicted. In 2023, just under a year after we spoke, the world’s biggest producer of lithium-ion batteries, China’s CATL, announced that it had leapfrogged the goal of four hundred watt-hours and created a condensed lithium-ion battery with up to five hundred watt-hours per kilogram. “The first time I went to the CATL facility, I was blown away—I have never seen anything like that,” Shirley Meng, the Argonne scientist, said of a visit she had made in the pre-COVID days. “There’s a couple hundred PhDs working on the engineering side, materials, quality controls, and things. But the actual assembly—there are very few people there.” The factory was all robot arms and razor’s-edge tech. When it came to batteries, China wasn’t moving slowly.
Chapter 38
No Guts, No Glory
The South of Congo has few paved roads, so you have to drive through Fungurume if you want to get from Lubumbashi to Kolwezi. I came to know this drive well. Fungurume had always fascinated me. One time, I saw a troupe of Rastafarians there hold up traffic for miles, dancing and gyrating in a great parade. The two-lane road that bisected the town was crisscrossed with skid marks from trucks that bore copper and cobalt. Jeef Kazadi had shown me where a truck had plowed into a market a few weeks before, killing some twenty people. The town radiated away from the highway, rambling over the Katangese hillscape. In any one panorama, the smoke from dozens of charcoal fires floated into the sky. One of the region’s few commercial activities that does not involve mining is making charcoal, which is used for cooking and heating and which people strap to their backs and haul great distances to sell along the roadsides.
Fungurume is also the site of one of the world’s largest copper-cobalt mines. Named for the two towns that sit within the concession—Tenke and Fungurume—the Tenke Fungurume mine is a series of massive open pits and mud-filled ponds gouged into an area that is spread across more than 580 square miles of Katangese bush. From the road, drivers can see massive earthworks and concrete drainpipes traversing barren scrubland that is occasionally punctuated by copses of musamba and muputu trees.
The land around Fungurume can be lush and verdant after the rains, but during the dry season, it is parched and stained with ocher dust that makes your sinuses ache. Driving through Katanga, I often thought about the studies showing that the dust in the region contains high levels of toxic heavy metals.
Humans have mined around Fungurume for thousands, if not tens of thousands, of years, drawn to the land at Tenke Fungurume because it contains an ore body that is unusually rich and thick. Even in places where the mineralization below the ground would by expectation be poor, Tenke Fungurume is rich in copper and cobalt—or, to put it technically, the “high-grade hypogene carrollite mineralization in the SD-1b subunit of the lower Shales Dolomitique (SD) Formation of the Mines Subgroup” wouldn’t generally be expected to be rich in anything at all. At Fungurume, however, the rocks below “boast cobalt concentrations as high as 3 wt% [percentage by weight, that is] along with Cu concentrations in excess of 4 wt%”—in other words, high concentrations. In a mining territory like Katanga, it was only a matter of time before they were dug up.
But Fungurume, surprisingly, didn’t see large-scale mining for a long time after the country’s colonization. By 1918, Belgium’s Union Minière knew there was ore there, but it was never tapped by Congo’s colonists. During the Mobutu years, the ore was dangled as a tantalizing prospect for investors. In 1970, a Belgian American mining impresario named Maurice Tempelsman led a consortium to develop the mine. Tempelsman hired Larry Devlin, the ex-CIA chief, to smooth things over with Mobutu and then spent $250 million on development, but he had to shut the project down after the dictator reneged on his promises. The truth was that Tenke Fungurume was being held in reserve by Gécamines as a long-term insurance policy against a time when the mines in Kolwezi stopped producing ore.
By the 1990s, Tenke Fungurume’s high-quality ore had remained out of reach for years, but it hadn’t been forgotten. The U.S. embassy kept an especially close watch on the plot, and the ambassador even visited Tenke Fungurume in 1991. Two years later, Gécamines officials offered it for tender, and there ensued a series of “chaotic” negotiations that involved a consortium of companies, including Anglo American and Phelps Dodge.
* * *
Over the next three years Adolf H. Lundin, the Swedish natural-resources investor whose family motto was “No guts, no glory,” emerged as a frontrunner. In 1996, he met with Mobutu in his villa on the French Riviera to hash out a deal. Mobutu, who took a liking to Lundin, gave him a tailored Lanvin shirt and told the Swede to address him as “Papa President.” What’s more, he said that Lundin could develop a dream concession: Tenke Fungurume.
Lundin was a jovial man with the kind of eyebrows that stay black long after a head of hair turns gray. He was also a passionate anti-Communist. “He used to say that instead of blood in his veins he had oil,” said Petter Bolme, a Swedish investigative researcher and journalist who has worked on the Lundin group of companies since 2008. “A lot of analysts loved him in the ’90s because someone compared the rapid stock-market rise of his company to stocks like Apple.”
Lundin’s companies were famous for wild fluctuations on the stock market—rapidly appreciating and just as rapidly depreciating, clearing out the savings of investors whom he had lured into purchasing stock. “He who cringes from risk can’t see the possibilities, and therefore will never succeed,” Lundin once said. “A person with a big ego is totally consumed with his product and will succeed.” The hard-charging attitude might have been profitable, but it also led to a landmark 2021 Swedish lawsuit in which two executives at the company were charged with abetting war crimes in Sudan around the turn of the millennium.
Another secret to Lundin’s success was big bucks, offered to any official, no matter how corrupt, who could smooth through a deal. Later, Lundin would recall that he had offered to give Mobutu money for his “election campaign,” but Mobutu had never followed up, and no money was ever paid. Gécamines and Congolese officials had seemed completely unable to organize the transaction, and one of Lundin’s officials later boasted about how he had to pay each of the fifteen negotiators $1,000 to even show up to meetings.
At the start of 1997, the prospects for Mobutu were looking shaky, so Lundin flew in to Lubumbashi to make a deal with M’zee Laurent-Désiré Kabila at the Karavia and began paying the rebels. (He continued to wear the shirt Mobutu had given him—for good luck.) When Kabila took power, Lundin’s company took control of the mine.
According to Bolme, in Congo, Lundin “saw the opportunity, which was creating a big mine that everybody knew about, that wouldn’t need much development for it to sell off as an asset.” Lundin was not looking to develop the huge mine, Bolme believed. “He didn’t have the capacity or the capital to do that,” Bolme said. From the beginning, Bolme argued, Lundin was looking at how “he could hold on to it, to do some exploration, make some holes in the ground, start a small mining operation, and sell it for a huge profit.”
The company declared force majeure, claiming that it was impossible to mine there while a civil war was ongoing. (The war also would have pushed any potential sale price down.) The site was not developed until 2006, and the first of its ore was exported in 2009.
* * *
By that point, the Lundin Group wasn’t the only operator at Tenke Fungurume. The politician Barnabé Kikaya Bin Karubi, who traveled to the U.S. as part of a Congolese delegation, remembers Joseph Kabila inviting U.S. investment into Congo’s mines. “President Kabila, because of us being accused of being pro-Chinese, asked President Bush, look I need the Americans to appoint a company, a reputable company in mining to come to Congo and take the Tenke Fungurume copper and cobalt mine,” Kikaya told me. In 2005, after protracted negotiations, Phelps Dodge, a U.S. mining firm originally founded in 1834, announced that it was acquiring a 57.5 percent stake in the Tenke Fungurume mine. “We went to Arizona where Phelps Dodge has a mining venture,” Kikaya continued. “We visited a beautiful mine, and we could see that these guys knew what they were doing.” Lundin would hold on to 24 percent of the company, and Gécamines would keep the rest.
The deal was closed under murky circumstances in 2007, using U.S. government funding from the Overseas Private Investment Corporation. Much was not made public about the purchase, leading journalists to call it a “backroom deal.” Just over a year later, Freeport-McMoRan, the Arizona-based minerals behemoth, bought Phelps Dodge for $25.9 billion. Freeport already owned a huge copper-and-gold mine in Indonesia called the Grasberg. Kikaya told me that Phelps Dodge found working at Tenke difficult. “The Congolese environment, the business environment, was something that they could not deal with.” They would call Kikaya’s office and say, “Ambassador Kikaya, we cannot function like this.” Permits and simple paperwork were slow to arrive. Congo’s bureaucracy may have been ravaged by years of war and corruption, but “an American businessman cannot sit waiting for an administration guy to sit on his paper for two days, three days,” Kikaya said. Phelps Dodge had to put up with too much bureaucracy, too much “nonsense,” as Kikaya put it, so they sold their stake to Freeport.
Melissa Sanderson, the former chargé d’affaires at the U.S. embassy, had taken a job at Phelps Dodge in 2006. The Grasberg, she told me, was the talk of the company. “It turned Freeport into the mouse that ate the elephant,” she said, “which was how that merger was classified when it took place, because PD [Phelps Dodge] had numerous mines all over the U.S. and, at that time, holdings in Mexico, Zambia, South Africa, and other places. And at that time, Freeport had one thing and one thing only. They had the Grasberg.” After the acquisition, Sanderson would rise to become director of international affairs for Freeport-McMoRan. After it acquired Phelps Dodge, Freeport became the largest copper-and-gold miner in the world.
But Freeport, which was run by James “Jim Bob” Moffett, a charismatic wildcatter from Louisiana, had long courted controversy at the Grasberg. “Jim Bob was very much a cowboy,” Sanderson said. “I’d say the common perception in the halls of Freeport is that the Grasberg was obtained with an exchange of suitcases with Suharto [the Indonesian dictator].” Allegations abounded that the company was violating the Foreign Corrupt Practices Act by paying off Indonesia’s army.
The Grasberg ended up being toxic in other ways too. In 2005, The New York Times noted that a multimillion-dollar environmental study conducted near the mine had found rivers “unsuitable for aquatic life” because of waste dumping. Norway’s sovereign wealth fund divested from Freeport.
At Tenke Fungurume, concerns soon arose about the way Phelps Dodge had acquired the mine, and especially about Gécamines’s role in the transaction. What’s more, in 2008, a Dan Rather Reports television segment showed how local residents had been displaced from Tenke Fungurume as mining began. The U.S. camera crew’s members were arrested by local police, who were in the pay of Freeport, as they tried to go to a village near the mine to interview local inhabitants. When a Congolese stringer for Rather’s team was able to enter a village with a camera in tow, people told him how they had been displaced to poor farmland, and how they had been paid pitifully small sums to move from land that their families had farmed for generations. In the segment, Rather framed the displacement as a “conflict between a powerful American company and Congo’s voiceless poor.”
In another report, this one jointly put out by the NGO Swedwatch and the International Peace Information Service, villagers who had been displaced from a village near Tenke Fungurume said they had been paid $360 for around a hectare of land. The fields at their resettlements were far from suitable. “This land is not fertile,” one of them told the investigators. “It is bulongo kwa koza, rotten land.”
* * *
Partly to mitigate the bad press, Freeport and Lundin began to make efforts to develop the local community. By 2013, the mining companies had built ninety-one wells and six schools, invested $50 million in environmental protection, and paid more than $795 million in taxes and royalties.
Problems, however, began to pile up. There were numerous clashes with the locals, as well as with artisanal miners (“illegal artisanal miners,” as a company publication would insist) who kept coming onto the concession. Sanderson objected to the company putting up a fence, which, as she saw it, created a headache for locals but didn’t really make the mine safer. “The concern was, we knew we had armed militia groups in the area, and some of them were living particularly in Tenke,” Sanderson told me. Among these groups, she said, were the Bakata Katanga, the separatists loyal to Gédéon, the “cannibal warlord.”
The pile of problems grew. In 2009, the Congolese government reviewed Tenke Fungurume Mining (TFM)’s contract. At the same time, Congolese police arrested three TFM staff members—including a Belgian, Dirk Vanhooymissen—who were accused of running a visa and work-permit scam. They were prosecuted “for misappropriation of public funds and forgery,” as Congo’s prosecutor-general put it. Freeport appealed to the U.S. embassy, which declined to help because Vanhooymissen was a Belgian subject, not a U.S. citizen. (“The stinkin’ government is no stinkin’ use to us,” Freeport staff grumbled. “Anytime we need ’em, they don’t stinkin’ do anything.”) In the end, Freeport agreed to pay a $16 million fine to the Congolese government.
Freeport officials began to become less and less comfortable with TFM, and with the realities of doing business in Congo. So-called facilitation payments were one thing that caused concern among employees. Under the Foreign Corrupt Practices Act, or FCPA, such payments, “the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official, political party, or party official,” are technically legal. Officials from other mining companies governed by different laws (the U.K. Bribery Act, for example, considers such payments to be illegal for British companies) were amazed to see Freeport shipping in “huge pallets of cash,” as one put it, to make payments to underpaid Congolese officials. “The legal division went over and over and over this, you know, to make sure that we weren’t going to get nailed under the law,” Sanderson said. “And the legal division reached a level of comfort with the facilitation payments.” She did not, she added, “think it was a good idea.”
Company culture, however, was changing at Freeport. Under Moffett, the company had developed a freewheeling attitude that was coming under increased scrutiny. Moffett still governed from on high as the company’s chairman, but he had stepped aside as CEO in 2003.
By the early 2010s, Kathleen L. Quirk, the company’s CFO, was keen on ensuring that Freeport did not become embroiled in a corruption scandal. “Kathleen, in particular, always just had a strong focus on the importance of legal and a strong awareness that FCPA can be fatal,” Sanderson told me. Board members had become uneasy about the risks of doing business in Congo.
At around the same time, Moffett put hundreds of millions of dollars into digging oil wells off the coast of Louisiana through a related company, McMoRan Exploration. As oil prices fell, so did Freeport’s stock price. And dig as they might, the wells kept coming up dry. Freeport eventually bought out the remainder of Moffett’s company.
The firm began to examine what assets it could sell off to pay down $5 billion to $10 billion in debt. Tenke Fungurume fell into the crosshairs, and Freeport began looking for a buyer. Chinese firms, anxious to capitalize on metals that it saw as key to the next stage of global growth, were quick to mobilize. By 2016, the firm had found a buyer in China Molybdenum, which used cheap debt issued by Chinese state banks to fund the deal. “I did not want to do it,” the CEO, Richard Adkerson, told attendees at an investors’ conference that year. “It breaks my heart to do it in a lot of ways, but in terms of stepping forward with our strategy, it is a good deal for Freeport.”
Sanderson was less impressed with Adkerson’s theatrics. “The truth is that they sold the Congo [TFM] because as a company, the biased Freeport leadership was too attached to the Grasberg,” she told me.
Congolese politicians tried to intervene. Kikaya told me that the government had been unaware that Freeport was selling to the Chinese. “Without telling us—we just woke up in the morning: We were in bed with a Chinese company,” Kikaya said. The New York Times reported that André Kapanga, the Congolese general manager of the mine, reached out to lawmakers and government officials in the United States to protest the sale.
The Congolese government, however, quickly became comfortable with the deal. China Molybdenum was certainly adept at currying favor with Congo’s powerful. In 2018, according to the Sentry, a transparency NGO, the Chinese firm bought Congo Construction Company or CCC, a firm that was closely linked to figures in President Kabila’s inner circle. CCC had recently spent $40 million in an opaque deal to buy the rights to mine a phosphate deposit from a company linked to the president’s family. (China Molybdenum argued that the acquisition was strategic—it worked with the mineral in Brazil, and as new battery technology came online, phosphates were becoming an important mineral for battery production—but the Chinese firm would be slow to develop the site.)
Tom Perriello, the U.S. special envoy for the African Great Lakes region at the time, understood that Freeport’s exit represented U.S. business leaving a key strategic region, and appreciated the worries that Congolese people were expressing: The Chinese buyers didn’t come up to Freeport’s record on the environment, and they believed that the firm was less committed to training up Congolese workers. “You know, the Obama administration was quite aware of the concerns,” Perriello told me in 2023, seven years after the deal. “Freeport was, in particular, was…it wasn’t a close call for them.” He added, “There were a number of dynamics, both in the company and in the global economy, that were drivers of that decision.” And, like their predecessors at Phelps Dodge, Freeport’s officials found operating Tenke to be unnecessarily bureaucratic and convoluted.
