Mineral Wars: The Rise of Geoeconomic Competition Over Copper and Cobalt Supply Chains and its Impact on the Political Stability of Producing Countries

Abstract

In today’s digital society, nations depend on electricity and various technologies for the functioning of their economies, security systems and daily operation. Two metals that are crucial for the manufacturing of the electrical infrastructure and technological devices that high income countries increasingly rely on are copper and cobalt. Copper is an essential component of any electrical circuit while cobalt is vital for many advanced technologies, particularly the rechargeable batteries present in portable devices and electric vehicles, and super alloys used in jet engines. The demand for these critical minerals is expected to grow rapidly over the next decade, largely driven by infrastructure required for the energy transition, necessitating the expansion of the mining industry to meet required production levels. Additionally, the global supply chains for these metals are increasingly dominated by China, creating a growing geopolitical struggle as Western and non-aligned nations seek to reduce reliance on Chinese production, and secure independent supplies to reduce their vulnerability. This thesis explores how this geoeconomic competition among global powers impacts the political stability of producing countries, focusing on the extent to which this competition exacerbates rent-seeking behaviors and contributes to conflict dynamics. The study analyzes twelve semi-structured interviews with industry experts and highlights three key findings: (1) industry expansion into politically unstable countries increases economic pressure on host governments and leads to the potential for greater rent-seeking; (2) China dominance in the copper and cobalt markets places and Western companies low risk tolerance, places western companies at a disadvantage, pushing them toward practices that may amplify rent-seeking behaviors; and (3) the unproductive spending and poor redistribution of mineral profits, is a central challenge for producing countries governments in mitigating political instability. The thesis concludes that geoeconomic competition and political instability related to mineral extraction are highly correlated, as geoeconomic competition provides increased incentive and opportunities for rent-seeking behavior, which can lead to public backlash against governments and mining companies.