CssDependency error with mini-css-extract-plugin for webpack

Getting the error with webpack and mini-css-extract-plugin:

Error: No module factory available for dependency type: CssDependency

This repo is a replication of the setup where the error occurs.

Steps to reproduce

• Checkout the repo
• Go into the directory
• npm install
• cd src/asset2
• run webpack. Builds ok.
• Go back to the top level
• run webpack. See the error.