China, Russia take critical minerals in Africa while US takes nap
Countries around the world are pursuing zero emission goals, which has created a bottleneck for critical rare earth elements (REEs) such as cobalt, copper and lithium. They are essential components in the production of renewable energy technologies, from electric vehicle batteries to wind turbine blades. Rare earths also play a key role in the manufacture of semiconductors and other electronic devices.
Access to these resources – both in raw and refined form – has never been more important. Just as oil was throughout the 20e century, essential minerals are the main inputs for future economic growth. Governments and private companies are increasingly recognizing this, leading to a global “gold rush” for these strategic minerals.
Annual global demand for rare earth elements, a subset of “critical minerals” deemed vital for economic security, is expected to increase from 208,250 metric tonnes in 2019 to 304,678 metric tonnes by 2025. Rare earths do not are not really “rare” – they are found all over the world, but deposits containing economically usable concentrations are less common, thus reducing the number of financially feasible extraction projects.
Competition for the refining of rare earths and other essential minerals is even more limited, with China holding a monopoly on downstream processing. In 2019, 80% of US imports of refined ETRs came from China. In addition, the main Chinese mining company “China Minmetals Rare Earth Co” announced a merger with two other companies, creating a global force in the strategic industry.
With accessibility limited by China and now supply chain disruptions linked to COVID, another emerging hurdle for rare earth supplies is the demand for more environmentally friendly mining methods. Extracting rare earth metals has environmental and political costs.
Rare earth mining is now under scrutiny as environmental activist groups question the methods used to harvest these minerals. In addition, the loss of income and the ecological impact on impoverished communities such as Native Americans in the United States and ethnic minorities in Africa are cause for concern – a critical mining hotbed.
Amid the growing social and environmental costs of mining in the West, less scrupulous countries like Russia and China are capitalizing on the growing demand. Although Russia holds the 4e the world’s largest supply of rare earths, at around 12 million tonnes, they – along with China – have decided to use political leverage to strike mining deals across Africa, where the workforce is good market and regulations are virtually non-existent. While China has entered the region with billions of dollars in Belt and Road funding, Russia is making inroads through the strategic deployment of mercenaries.
Africa, an extremely politically unstable continent, has offered Russian private security entrepreneur Wagner an opportunity to capitalize on sales of minerals and mining operations. The Wagner Group uses its military tactics to support governments in times of conflict – and in turn has enjoyed lucrative mining deals and special diplomatic status within countries.
Russia plans to continue expanding its influence in the region through operations of private military companies (PMS).
Geopolitical competition has been concentrated in North and West Africa, where China and Russia mine and process rare earths. This is mainly attributed to China’s rise in the Belt and Road initiative. As of October 2021, Chinese banks accounted for about a fifth of all lending to Africa, concentrated in strategic or resource-rich countries, including Angola, Djibouti, Ethiopia, Kenya and Zambia. The annual borrowing in 2019 is estimated at $ 7.6 billion, as Russia mainly used the Wagner Group to project electricity from the continent.
But Africa is not the only target of Chinese mining initiatives. China has also taken the initiative to invest in Latin America’s mineral resources while the United States sleeps on the switch.
In Brazil, large Chinese companies such as Ningbo Zhoushan have signed a lucrative deal with Brazilian mining giant Vale to export iron ore to mainland China for processing. Beyond Latin America, China and Russia have explored expansion opportunities in their backyard, Eurasia. Critical to their long-term economic future, the Russian government has pledged to invest more than $ 1.5 billion in national mining projects, with the hope of becoming a rare earth powerhouse by 2026. Differently, China’s strategy in Eurasia has focused on Mongolia, where companies have invested heavily in mining operations.
Like the extraction of hydrocarbons essential to economic security, rare earth mining has become an increasingly political issue. Political and private sector leaders – at least in the West – must be sensitive to the potentially destructive impacts of such mining activities, both at home and abroad.
Beyond the development of more environmentally friendly extraction techniques (which are always economical), the West must adopt new methods to increase access to minerals. This should include the development of national strategic mineral reserves to be used in the event of a supply shortage – much like the Strategic Petroleum Reserve (SPR) in the United States today. Recycling of minerals, substitutes and prospecting technologies should also be pursued. The latter will be essential for identifying rare earth deposits in places less likely to cause serious economic impacts, such as the seabed and even in outer space.
Indeed, the potential of asteroid mining has aroused the interest of the great geopolitical powers as an alternative to rare earths. Asteroid mining could lead to unfathomable reserves of iron, nickel and platinum. This would reduce the environmental impact of mining on the land, which alleviates concerns about deteriorating climatic conditions. Although launching such missions would be expensive, such operations are considered part of space expansion policies in Russia, China and the United States.
The importance of critical minerals for the energy transition and future economic growth is undeniable. How nations and private companies decide to ensure environmentally friendly, affordable and reliable access to these resources will have far-reaching geopolitical, environmental and social ramifications.
With the help of Riley Moeder and James Grant