THE RECONFIGURATION OF THE GLOBAL SUPPLY CHAINS OF CRITICAL MATERIALS: BEHAVIOURS AND OUTCOMES IN THE COBALT SECTOR J. C. M BEDDER St Catherine’s College University of Cambridge This dissertation is submitted for the degree of Doctor of Philosophy 2020 The reconfiguration of the global supply chains of critical materials: behaviours and outcomes in the cobalt sector Declaration This dissertation is the result of my own work and includes nothing which is the outcome of work done in collaboration except as declared in the Preface and specified in the text. It is not substantially the same as any that I have submitted, or, is being concurrently submitted for a degree or diploma or other qualification at the University of Cambridge or any other University or similar institution except as declared in the Preface and specified in the text. I further state that no substantial part of my dissertation has already been submitted, or, is being concurrently submitted for any such degree, diploma or other qualification at the University of Cambridge or any other University or similar institution except as declared in the Preface and specified in the text. This dissertation is submitted according to the requirements of the Degree Committee of Land Economy. It does not exceed the regulation length including footnotes, references and appendices. Jonathan Charles Michael Bedder 10th March 2020 Words: 79,997 (without tables) 1 The reconfiguration of the global supply chains of critical materials: behaviours and outcomes in the cobalt sector Abstract Why are contemporary raw material supply chains structured as they are? This dissertation explores what shapes the supply chains of ‘critical materials’, metals and minerals which are of high economic importance and are at risk of supply shortage. The research focusses on cobalt, a metal mined mostly in the Democratic Republic of the Congo (DRC) and consumed mostly in the production of lithium-ion batteries in Asia, which are used in portable electronics and electric vehicles. Focussing on the 2007 to 2017 period, the aim of this research is to determine how the cobalt supply chain is structured and organised, how its structure and organisation have evolved temporally, how firms and states have responded to cobalt’s criticality, and how these responses have resulted in spatial and structural outcomes. The research thus aims to identify outcomes in the cobalt supply chain as well as the behaviours that have shaped those outcomes. Research findings show that firms responded to cobalt’s criticality through foreign direct investment and vertical integration, thus altering the structure and geographies of the cobalt supply chain. Chinese firms, in particular, invested heavily in Congolese cobalt assets in order to secure access to cobalt units for Chinese downstream consumers and brought more production processes within the boundaries of the firm to capture value. These firm-level developments took place in the context of state-level responses to cobalt’s criticality. The research shows how a resource-holding state, the DRC, employed resource nationalist policies in order to capture value from the cobalt chain, while China, a resource- seeking state, created the conditions necessary for firms to acquire overseas cobalt assets and develop domestic capabilities in order to capture value. The research is grounded in the literature on resource scarcity, global supply chains, and global production networks (GPNs). Empirically, this dissertation provides the first detailed analysis of the cobalt supply chain within economic geography and demonstrates the potential of the GPN and related frameworks, as well as more traditional theories of the state, firm and international trade, to contribute to the debate on critical materials and explain the structure and formation of their complex global networks. Conceptually, the dissertation makes a small contribution the research on supply chains by examining how the factors that make materials critical (supply risk and economic importance) have brought about reconfigurations of supply chains, influenced the tactics of key actors, and shaped the geographies of resource extraction, production, and consumption. 2 The reconfiguration of the global supply chains of critical materials: behaviours and outcomes in the cobalt sector Acknowledgements Undertaking a part-time PhD has been a life-changing experience. What’s more, life has changed immeasurably over the course of my time at Cambridge: I got a cat, I got engaged, I got married, I emigrated, I repatriated, I got a house, I got a dog, I got a son. I am enormously grateful for all of these experiences, as well as those that have come about directly as a result of this study of critical material supply chains. I have been fortunate enough to meet and discuss cobalt with interesting and engaging people across the world. My study of cobalt has taken me to the casinos of Las Vegas, to the skyscrapers of Tokyo, Shanghai and Hong Kong, and to the mines and refineries of Kolwezi and Lubumbashi. I am incredibly thankful and have a number of people to thank. I was fortunate enough to have two supervisors at Cambridge. I am indebted to Professor Ron Martin and Professor Peter Tyler, who agreed to supervise a study of UK regional economic development that somehow evolved into an examination of the cobalt supply chain. Without their ideas, academic support, good humour, and constant encouragement, I would not have been able to chart the uncertain waters of part-time PhD study. Both have taught me a great deal about how to think and how to write. In return, I hope I have been able to teach them a little about cobalt. I would like to thank all of my colleagues at Roskill for their support and friendship. I would especially like to thank Robert Baylis, who first got me interested in critical materials, and with whom I have spent countless hours discussing the complexities of raw material supply chains. His flexibility and understanding as an employer enabled me to undertake part-time study at Cambridge whilst working full time, and without this, the PhD simply would not have been possible. I would also like to thank Dr Nils Backeberg, with whom I spent an unforgettable time in the Central African Copperbelt exploring the cobalt mines and refineries of the DRC and Zambia. His enthusiasm for my research and his detailed comments on the manuscript helped enormously in the final stages of the project. While I am not sure I will ever share in his irrational love of rocks, I thank him for at least trying to kick-start my geological education. Finally, I would thank my friends and family for their unwavering patience and love. Thanks to Jeff Burton for encouraging me to embark on a PhD in the first place and for constantly checking in to make sure I hadn’t gone mad. Special thanks to my parents for their love, support, sacrifices and all they have invested in me and my education. And lastly, thanks to Holly and Alfred, for everything. 3 The reconfiguration of the global supply chains of critical materials: behaviours and outcomes in the cobalt sector Contents Declaration 1 Abstract 2 Acknowledgements 3 Contents 4 Nomenclature 8 List of Tables 2 List of Figures 4 Part I 6 1. Introduction 8 1.1 Research background 8 1.2 Previous research and gaps 11 1.2.1 Critical materials 11 1.2.2 The case of cobalt 13 1.2.3 Global chains and networks 16 1.3 Research aims and questions 18 1.4 Methods 19 1.5 Scope and summary of chapters 21 2. Resource scarcity, critical materials and the case of cobalt 25 2.1 Resource scarcity and growth 26 2.2 Critical materials 31 2.3 Critical material sector characteristics 36 2.3.1 Antimony 37 2.3.2 Chromium 37 2.3.3 Niobium 37 2.3.4 Rare Earth Elements 38 2.3.5 Tungsten 38 2.4 Selecting a case study critical material 38 2.5 Cobalt: a critical metal? 41 3. Theoretical debates on the nature and organisation of global supply chains 45 3.1 Theories of international trade 47 3.1.1 Classical trade theories 47 4 The reconfiguration of the global supply chains of critical materials: behaviours and outcomes in the cobalt sector 3.1.2 New trade theories 48 3.1.3 Network approaches to international trade 49 3.2 Theories of the state 50 3.2.1 Resource nationalism 51 3.2.2 Rentier state theory 53 3.2.3 Resource curse theory 53 3.3 Theories of the firm 57 3.3.1 Firm structure theories 58 3.3.2 Firm location theories 61 3.4 Global chains and production networks 65 3.4.1 Global chains 66 3.4.2 Global commodity chains and global value chains 67 3.4.3 Global production networks 68 3.5 Derivation of research questions 78 4. Methodology and data 81 4.1 A Global Production Network (GPN) approach 84 4.1.1 Data 84 4.1.2 Data limitations 84 4.1.3 Methodology 84 4.2 An International Trade Network (ITN) approach 85 4.2.1 Data 85 4.2.2 limitations 87 4.2.3 Methodology 89 4.3 Case studies 91 4.4 A cobalt-sector survey 91 4.4.1 Cobalt-sector survey design 92 4.4.2 Cobalt-sector survey sample and distribution: representing the cobalt universe 94 4.4.3 Cobalt-sector survey responses 96 4.4.4 Cobalt-sector survey statistical testing 99 4.5 Semi-structured interviews with cobalt-sector actors 99 4.6 Overview of work stages 103 4.7 Ethics and risks 105 4.7.1 Harm to participants 105 4.7.2 Lack of informed consent 106 4.7.3 Deception 107 4.7.4 Risks 107 4.7.5 Summary: a mixed-methods approach to understanding the cobalt supply chain 107 5 The reconfiguration of the global supply chains of critical materials: behaviours and outcomes in the cobalt sector Part II 109 5.