Reimagining US Investment in the Lobito Corridor

The US president, Joe Biden visited Angola, delivering on the promise he made during the 2022 U.S.-Africa Leaders Summit. This trip marks the first visit ever by a sitting U.S. president to the Republic of Angola, and the first visit of a U.S. president to Sub-Saharan Africa since 2015. ^[1] Why would the President of the United States of America visit the continent when he is expected to step down from office in a few days?

Despite the late timing, the visit is indeed important because it reinforces the commitment that Africa has always been the priority for the United States despite a gap between Obama’s visit in 2015 and Biden’s trip to Angola in 2024. The visit comes after President Biden hosted Angolan President, João Lourenço in the Oval Office in Washington, D.C in November 2023. These visits helped improve the bilateral relationship between the countries in areas of defence, security, and infrastructure investment. Another noteworthy reason for his visit is geopolitical in nature; the provision of access to critical minerals in Africa is essential for countering Chinese competition.

Background

Historically, the Lobito Atlantic Railway was known as the Benguela Railway. The Portuguese constructed it in the early 1990s to link Angola’s Lobito Port on the Atlantic coast to the mineral-rich regions of the Democratic Republic of Congo (DRC) and Zambia. The railway was fully functional by 1929 but after Angola gained independence in 1975, the operations got disrupted due to the civil war that ensued from 1975 to 2002. No rehabilitation was carried out until the Chinese government made substantial investments and restored the railway connection between Lobito port and the DRC border. From 2006-14, the Chinese renovated the Lobito railway network, further increasing its foothold in the region. The Chinese through its rail-for-oil initiative, a $2 billion enterprise, upgraded the entire rail network to accommodate 67 stations and trains travelling upto 90 kmph.^[2] According Jornal de Angola, May 2012 edition, the railway only carried 5,640 tons of goods and 129,430 passengers in 2011 as opposed to the promised goal of carrying 20 million tons of cargo and 4 million passengers.

In 2022, the Lobito Railway Atlantic Company (LAR), a joint venture among international companies- Trafigura, Portugal’s Mota-Engil, and Vecturis SA of Belgium, was awarded a 30-year concession to manage the railway. The consortium to upgrade the railway and infrastructure committed to an investment of more than $450 million in Angola and $100 million in the DRC. The Lobito Corridor is the first strategic Partnership for Global Investment and Infrastructure (PGII) economic corridor that President Biden launched in Japan on May 2023 at the G-7 Summit. This was followed by the EU and the US releasing a Joint Statement to support the development of the Corridor on the margins of the PGII event at G-20 in India on September 9, 2023. The proposed rail project would involve the construction of 350 miles of new rail line in Zambia that will connect its northwest region to the southern part of the DRC, giving Zambia access to the Atlantic Ocean.

Lobito Corridor and proposed extension into Zambia

On October 26, 2023, during the Global Gateway Forum, the European Commission and the US signed a Memorandum of Understanding (MoU) with Angola, DRC, Zambia, the African Development Bank (AfDB), and Africa Finance Corporation (AFC) for conducting feasibility studies for the railway corridor. In September 2024, the US Secretary of State, Anthony Blinken announced the completion of an initial feasibility study and launch of the environmental and social impact assessment for the Zambia-Lobito rail project, a greenfield 800-kilometer rail line being built from scratch linking Angola and Zambia for the first time. These studies ensure the project is economically and financially viable and follows international best practices on labour, community participation, and environmental protection. AFC, Angola, and Zambia also celebrated the signing of the concession agreement, which allows the next phase of development to continue. The target date to break ground is early 2026. ^[3]

In January 2024, Amos Hochstein, a senior White House advisor said that the first phase would upgrade the rail line on the Angolan side while the second phase would build a new multibillion-dollar rail through Zambia and beyond. The importance of these plans was fully appreciated during the Lobito Corridor Private Sector Investment Forum held in Zambia on February 8, 2024, where it was decided to accelerate private sector investment in the Lobito Corridor. This was the first PGI Investor Forum outside the US, bringing together international investors and industry leaders worldwide.

In December 2024, the US and Angola co-hosted a PGI Lobito Trans-Africa Corridor Summit bringing together the leaders from the DRC, Zambia, and Tanzania as well as the Africa Finance Corporation (AFC) to develop and invest in the corridor’s infrastructure to connect the Atlantic and the Indian Oceans. The leaders also pledged to accelerate the next phase which is the new Zambia-Lobito rail project. During his historic visit, Biden announced over $560 million in new funding for infrastructure development along the corridor. He also committed to adding an additional $200 million via private-sector investment, bringing the total investment in the corridor by the US to over $4 billion. With these announcements and together with the support of G7 partners and regional development banks, international investment in the Lobito Corridor has exceeded $6 billion. These investments will be mobilized towards new and continuing projects that support the economic potential and development impacts of the Corridor across multiple interconnected sectors, including transportation and logistics, agriculture, clean energy and associated supply chains, health, and digital access. ^[4]

Significance

The corridor holds a lot of significance due to its immense mineral wealth. The corridor passes through the densest mineral deposits in the DRC’s Katanga region and Zambia’s Copperbelt. Angola is rich not only in oil reserves but also holds possession of 26 of the 51 most critical minerals including chromium, cobalt, graphite, lead, lithium, and nickel in the world. The Lobito port is strategically located, on the Atlantic coast and thus gives buyers and sellers in Europe and Africa easier access to the heart of the continent. When completed the corridor will boost the movement of goods and people between the DRC and Zambia mineral-rich areas with the Angolan port, directly linking these landlocked countries to global markets. Earlier, the Canadian miner company, Ivanhoe had to ship its copper via road infrastructure to South Africa, Tanzania, and Mozambique ports. It was a much larger route with high cutting costs and intricate logistics. Now, via the Lobito Corridor, in 2023, it shipped its first copper through Angola from its Kamoa Kakula copper complex in the DRC, saving time and money. ^[5]

China, through the Belt and Road Initiative (BRI), for over a decade now, has continued to dominate critical minerals supply chains worldwide. It has invested close to US$ 22.4 billion across different economic sectors in Central Africa. However, Beijing’s model for economic cooperation has been very transactional in the region. The African countries of Angola, Zambia, and DRC have exported their natural resources in abundant quantities and in return, China has undertaken some infrastructure development. A prime example of this give and take is from the year 2006, when China signed an ‘infrastructure for oil deal’ with Angola and in return, built infrastructure across Angola. This arrangement also means that the repayment of Chinese investments in Angola, Zambia and DRC is directly tied to their supply of natural resources and any default, due to fluctuations in global demand, would mean restructuring of debt repayments, creating a debt trap like situation. In fact, this is what happened between 2016-23, when Chinese owned banks renegotiated loans connected to oil and mineral supplies worth $21.3 billion in Angola, Zambia, Zimbabwe and DRC. ^[6]

In such a situation, the arrival of the US president is significant. It builds hope that the US investment in the corridor would not only diversify the global supply chain but also reduce Chinese influence. This is an important opportunity for the US to redeem itself in Africa, a continent it had ignored for a long time. The project adopts a more lenient and multilateral approach, where partnerships with regional players like the AfDB will help share the financial burden of raising money for long-term infrastructure projects, as evident in 2023 when AfDB helped raise $1.6 billion. ^[7] The corridor also provides the US with an opportunity to strengthen trade ties with central African countries vis-a-vis initiatives like the African Growth and Opportunity Act (AGOA). For instance, this Act would provide African countries duty-free access to the US markets while securing a stable supply of critical minerals.

Africa, as a whole, is home to about two thirds of the world’s cobalt reserves, about 10 percent of copper, 30 percent of lithium, 15 percent of rare earth elements, 95 percent of chromium, 20 percent of graphite and more than 30 percent of manganese. ^[8] The African Union Commission’s Department of Economic Development, Trade, Tourism, Industry and Minerals (ETTIM) partnered with the Expertise France under the project “French Facility for Technical Assistance to the African Union – phase III” to finalize the drafting and validation of the African Union’s Model Law on Mineral Resources Development. ^[9] This was to ensure sustainability, equity and transparency in mineral extraction, and provide African governments with proper guidance to increase domestic revenue generation. The US backed Lobito project already partners with regional players like the AfDB which ensures that international investors cannot exploit and establish terms that are disadvantageous to the African countries. The Model Law when finalized would not only ensure best practices in mining and extraction but also provide a strong institutional framework for regulation and management of mineral resources in Africa.

Conclusion

The Lobito Corridor is a cornerstone of Southern Africa’s development that boosts regional and global trade by transporting critical minerals but in addition, it also acts as a bulwark for Africa to ease the fatigue over debt repayments that it has faced due to repressive Chinese deals. The shift in power in January 2025 when US President-elect Donald Trump takes office might also signal a shift in policy. Whether a change of power creates uncertainties or brings in positive developments for projects like the Lobito Corridor remains to be seen. There is a chance that by focusing on more multilateral cooperation, there would be a stronger emphasis on America First policies. However, it would be truly beneficial if he could avoid a transactional approach to trade policies and see the Corridor as a means for achieving stable diplomatic relationships.

Despite the size and diversity of the continent, all the countries share a common need for capital and infrastructure investment and this gives the US an opportunity to not only strengthen existing ties but also create fresh economic and diplomatic ties with Africa. It is currently estimated that the entire project will be completed in 2029. This timeline gives the US around five years to make a positive impact on US-Africa ties. For the US, it’s better late than never.

Endnotes

^[1] FACT SHEET: President Biden’s Trip to Angola, The White House, 20 December, at https://www.whitehouse.gov/briefing-room/statements-releases/2024/12/02/fact-sheet-president-bidens-trip-to-angola/ [4]
^[2] Lobito Corridor: What It Is & Why It Matters, Lobito Corridor Investment Promotion Authority, 26 December 2024 at http://lobitocorridor.org/ [5]
^[3] FACT SHEET: Partnership for Global Infrastructure and Investment in the Lobito Trans-Africa Corridor, The White House, 23 December 2024 at https://www.whitehouse.gov/briefing-room/statements-releases/2024/12/03/fact-sheet-partnership-for-global-infrastructure-and-investment-in-the-lobito-trans-africa-corridor/ [6]
^[4] US FACT SHEET: Partnership for Global Infrastructure and Investment in the Lobito Trans-Africa Corridor, US Embassy and Consulates in China, 29 December 2024 at https://china.usembassy-china.org.cn/fact-sheet-partnership-for-global-infrastructure-and-investment-in-the-lobito-trans-africa-corridor/?_ga=2.206520851.1046997769.1735458627-691556350.1725645636 [7]
^[5] Lobito Corridor: What It Is & Why It Matters, Lobito Corridor Investment Promotion Authority, 23 December 2024 at http://lobitocorridor.org/ [5]
^[6] The Lobito Corridor, a Route to African Development? Lobito Corridor Investment Promotion Authority, 25 December 2024 at https://rhg.com/research/chinas-external-debt-renegotiations-after-zambia/ [8]
^[7] African Development Bank joins global partners to raise financing for $1.6 bn multinational Lobito Transportation Corridor programme, African Development Bank Group, 29 December 2024 at https://www.afdb.org/en/news-and-events/press-releases/african-development-bank-joins-global-partners-raise-financing-16-bn-multinational-lobito-transportation-corridor-programme-65357 [9]
^[8] Critical Minerals and their Role in Energy Transitions in Africa - Progress in the implementation of decisions of the African Ministerial Conference on the Environment and consideration of emerging environmental issues: critical minerals and their role in energy transitions in Africa - Note by the Secretariat, UNEP, on 29 December 2024 at https://wedocs.unep.org/handle/20.500.11822/43012;jsessionid=BE75B7E92FA36F8B942315020D5169B5 [10]
^[9] The 5th Drafting Meeting of the Technical Working Group on the African Union Model Law on Mineral Resources Development, African Union, on 30 December 2024, at
https://au.int/en/newsevents/20241014/5th-drafting-meeting-technical-working-group-african-union-model-law-mineral [11]

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