USA: Concerned about their vulnerability to China and Russia, the United States and its allies have established a funding initiative for resource-rich African nations in order to support crucial mineral supply chains necessary for a clean energy transition that will counter China’s hegemony.
The Minerals Security Partnership, a US-led organisation, met in New York last month to discuss priorities, difficulties, and opportunities in ethical mining and processing of crucial minerals.
Together with the US, Australia, Canada, Finland, France, Germany, Japan, South Korea, Sweden, Britain, and the European Commission, the partnership was launched in June in Canada.
Five of Africa’s mineral-rich nations, including the Democratic Republic of the Congo (DRC), Mozambique, Namibia, Tanzania, and Zambia, attended the meeting in New York. The programme promises to provide funding and knowledge to assist African countries in enhancing domestic processing of vital minerals.
At the meeting, US Secretary of State Antony Blinken stated that the US and its allies were willing to “providing a loan guarantee or debt financing” to nations that had a plentiful supply of the minerals used in solar panels, wind turbines, and electric car batteries. In order to support the US’ transition to green energy, President Joe Biden is trying to secure minerals like lithium and cobalt, a supply chain that is dominated by China.
According to Blinken, the initiative would provide funding for initiatives that met strict environmental, social, and governance standards. Instead of a race to the bottom, he declared, “We want to make this a race to the top.”
As an illustration, he cited a mine in Balama, Mozambique, which will soon send graphite to a plant in Louisiana for additional processing so that it can be used to make batteries for American producers of electric vehicles.
In terms of the downstream value chain for the majority of the essential minerals and metals required for green technology, according to Guillaume Pitron, an associate research fellow at the French Institute for International and Strategic Affairs who specialises in raw materials and digital pollution, China has the upper hand.
He said, “The US and Europe are waking up, but it will take time.”
“The case of cobalt is of real interest” in Africa, he continued.
China now holds a monopoly over the import and processing of essential minerals, particularly those used to make the batteries for electric vehicles.
It has significant mining interests in several African nations. For example, it obtains more than 60% of its cobalt requirements from the DRC. Additionally, since last year, Chinese businesses have made a number of purchases in Zimbabwe for lithium, which is highly sought after for lithium-ion rechargeable batteries that power solar panels and electric vehicles. South Africa, Namibia, Zambia, and other resource-rich nations are also of interest to China.
China had more foresight and fewer restrictions when it came to securing access in Africa, according to Lauren Johnston, senior researcher on China-Africa at the South African Institute of International Affairs. In addition to having ongoing investments in Australia, Canada, and Chile, it has made investments in the DRC, Zambia, and Zimbabwe.
She claimed that recently, it seemed like the US government was putting money up for opportunities in the crucial metals market. For instance, it is funding the expansion of the battery supply chain in Australia.
It’s ironic that they require China; in some circumstances, China cannot be excluded. They are the only ones who have the processing expertise, according to Johnston.
According to her, a large portion of the processing is hazardous and toxic, which is one reason why China dominates these industries. China has been the nation most willing to take on the associated financial and environmental risks.
But overall, she claimed, it was difficult to enter that kind of industry due to the standards and knowledge needed.
Johnston claimed that the minerals in Africa represented a “big chance” for the Southern African Development Community, a group of 16 member nations, the majority of which are in Southern and Central Africa. Let’s hope they join the newly developing global supply chain, he said.
The head of the Africa programme at the London-based think tank Chatham House, Alex Vines, predicted that the West would try to lock down supply chains or at the very least, make sure that the minerals were available on the market. According to him, China’s state oil companies in Sudan produced oil that they sold on the open market rather than locking it up, some of which was purchased by Japan.
According to Vines, “Western countries are looking at what minerals are strategic or critical and how to improve their supply chains.”
According to him, African mineral producers should have more power because of the abundance on the continent because they will be able to negotiate better prices. The question is, “Will these governments use this opportunity to assist in the reduction of poverty and to promote development and jobs, or will it be just for narrow elite consumption? cited Vines.
In nations like Angola, Zimbabwe, Cameroon, Ghana, Nigeria, and Guinea, Russian companies have interests in the minerals coltan, cobalt, gold, and diamonds.
In a recent study, the African Climate Foundation found that the Russian private security company Wagner profited from the sale of minerals and mining operations in Africa.
According to the report, the Wagner group used military strategies to support governments during hostilities and received lucrative mining contracts and special diplomatic standing in return.
According to study authors Antonio Andreoni, a professor of development economics at SOAS University of London, and Simon Roberts, a professor of economics at the University of Johannesburg, “Russia plans to continue expanding its influence within the region through private military companies’ operations.”
They claimed that as superpowers competed for access to vital minerals, the African continent was turning into a battleground, with major roles being played by Chinese and Russian businesses.
The study found that the continent was rich in strategically important mineral resources.
For instance, the DRC produces 70% of the world’s cobalt, and South Africa and Zimbabwe account for more than 80% of the world’s known platinum and manganese reserves. Ruthenium, iridium, and rhodium are commonly supplied by South Africa, while manganese is primarily produced in Gabon. According to the study, significant graphite reserves were found in Mozambique and Tanzania, and significant copper resources were found in the DRC and Zambia.
According to the researchers, China’s dominance in rare earth metals and control over important mineral supply chains are two of the US and its allies’ biggest strategic weaknesses since the 1970s energy security crisis that was brought on by the Arab oil embargo.
According to Cleveland State University associate professor of operations and supply chain management Jen-Yi (Jay) Chen, Western nations will and should examine the supply chains of important goods and “make sure they are diversified enough to not become victims of any geopolitical tensions.”
Despite being expensive, he claimed that Western nations’ efforts to rebuild their supply chains for essential minerals were not the only way to diversify their economies as long as they did not put all their eggs in one basket.
As a result of its natural mineral wealth, he stated that African nations “should leverage these resources, but look beyond just the short-term economic values of these minerals and seek to integrate further down the supply chains, like luring manufacturers to invest there, for more sustainable economic prosperity.”