14 C
New York
Wednesday, June 7, 2023

Buy now


How the U.S. plans to break China’s grip on African minerals

riceIndaba, Africa’s largest mining conference, is an anthropologist’s dream. There are corporate CEOs: alpha males keen to strike big deals for big rocks. There are engineering staff in bright corporate attire, like a darts team at a tournament, and colorful African delegations: Ghanaians in kente cloth, or Congolese dandies the size of clocks. They were offset by Chinese officials in dark suits and Saudis in white thaw suits.

Hear this story.
Enjoy more audio and podcasts iOS or android.

Your browser does not support

This year’s event, held in Cape Town in February, attracted the largest U.S. delegation ever, including officials from the White House and the State, Commerce and Energy departments. Its size reflects the US’s desire for 50 “key minerals” it believes are critical to reducing carbon emissions and creating green jobs in the process. While the U.S. search is global, Africa, which holds about 30 percent of the world’s mineral resources, is an important part of the search. By pledging to do mining differently — whether China is doing it now or the West has done it in the past — the U.S. says it will help transform African economies. “The energy transition is an opportunity to transform Africa,” said Amos Hochstein, Joe Biden’s special envoy for energy security.

U.S. officials see Africa as a solution to two problems. The first is the global shortage of mineral resources needed to meet climate goals. The official forecaster, the International Energy Agency, estimates that by 2040 clean technology manufacturers will increase their demand for lithium 40-fold, graphite 25-fold and nickel and cobalt about 20-fold. Demand for rare earth elements — metals in the esoteric part of the periodic table used in everything from wind turbine magnets to fighter jets — could be seven times higher by the end of the next decade.

The second problem, at least for the West, is China’s enormous influence on supply chains. China refines 68 percent of the world’s nickel, 40 percent of copper, 59 percent of lithium and 73 percent of cobalt, according to a July report by the Brookings Institution, a U.S. think tank. “China has let itself go for 15 years while the rest of the world sleeps,” said Brian Menell, chief executive of mining company TechMet. Despite China’s weaker mining dominance, its companies Competing with multinational giants, Western governments worry that without additional supply, companies will struggle to meet the new downstream processing facilities officials want to build in friendly countries.

The U.S. sees cobalt used in batteries as a cautionary tale. In Congo, which accounts for about 70% of global production, Chinese entities owned or held stakes in 15 of 19 cobalt mines as of 2020.US decision to allow us A company’s sale of one of Congo’s largest copper-cobalt mines to China in 2020 was seen in Washington as a colossal act of folly. There is little consolation that battery makers are trying to reduce their use of cobalt, partly because of concerns about operating in Congo. “We cannot allow China to become OPEC One of the key minerals,” said a U.S. official, referring to the oil cartel.

Three aspects of the US approach can be identified. The first is a multilateral effort involving Western allies. In June, U.S. Under Secretary of State for Economic Growth, Energy and the Environment Jose Fernandez launched the Mineral Security Partnership, whose 13 members include all G7 countries and European Union. Many of these countries are also seeking to acquire more rare rocks. The UK launched a “Critical Minerals Strategy” in July 2022, and the European Commission is due to present a critical raw materials bill later this month.

A U.S.-led partnership is underway. But the idea seems to be that member states will support their own companies with proposed mining projects that will meet high environmental, social and governance requirements (ESG)standard. That support could include lobbying by diplomats in the country where the mine is being built, project financing or helping attract private investment. The partnership is not limited to projects in Africa, with representatives from Congo, Mozambique, Namibia, Tanzania and Zambia participating in a seminar in New York last year. In calling the meeting, Mr Blinken highlighted a graphite mine in Mozambique whose owner had secured a loan from the US government, which had ostensibly reduced the risk of conflict in the region by providing jobs for locals. Its output will be sent to Louisiana for processing.

The second part of the US approach involves its development agencies “reducing risk” programs, as they do in the agriculture or power sectors.as well as us The Export-Import Bank, which provides trade finance, and the International Development Finance Corporation (DFC). In 2018, the Trump administration will DFC(or rather, its predecessor) capped lending at $60 billion and changed the rules so it could also take an equity stake in the company.although DFC There is currently only one direct investment in mining (Mr. Menell’s TechMet) and it is eager to add more.

The third element is more active diplomacy in Africa. Several top officials, including Treasury Secretary Janet Yellen, have visited the continent since Biden hosted more than 40 African leaders in Washington last December. Mr. Biden is expected to visit this year. America’s interest in Africa goes beyond minerals. But it’s worth noting Mr. Hochstein, who spends much of 2022 dealing with the impact of Russia’s invasion of Ukraine on oil and gas markets, is in Indaba.

An early diplomatic success was the Lobito Corridor. The idea of ​​revamping the railway that would transport copper from Congo and Zambia to the Angolan port of Lobito has been discussed for decades. This route is much quicker than a typical road trip to South Africa’s Durban port. But progress stalled until new presidents took office in the three African countries involved (Angola’s João Lourenço in 2017, Congo’s Felix Tshisekedi in 2019 and Zambia’s Hakain de Hichilema in 2021) not before. The trio have better relations with the US and each other than some of their predecessors — and are less inclined toward China. Last year, a Western-led consortium beat out Chinese companies to win the contract to rebuild the railway. U.S. diplomats hope this will make investment in the three countries more attractive and open up a new route to processing plants outside of China.

Another potential success is the memorandum of understanding signed in January between the US, Congo and Zambia. The United States says it will help Africa’s two largest copper exporters do more than just sell the metal in its elemental state. Under the agreement, the United States agreed to help the two African countries build supply chains to process their raw ore into battery precursors for electric vehicles.

African politicians have welcomed the US push with caution. Zambia’s finance minister, Situmbeko Musokotwane, said he knew Western countries couldn’t dictate to their own companies. But “by talking about perceived risks in Africa, they can still help.”

Small mining companies are responding to Western signals. An Australian executive who has sold mines to Chinese companies said he was now exploring projects in countries with good relations with the US, such as Namibia and Zambia. “Five years from now, the West will be really hopeless. We want to be prepared,” he said.

Other small miners want West to ESG– Friendly mining projects will make them an even more attractive investment proposition. Many have cited the soon-to-be-listed New York-listed Lifezone Metals, which plans to extract nickel from a planned mine in Tanzania using a technology that is much less carbon-intensive than usual smelting methods.last year it won BHP Billiton Group – the world’s largest mining company’s first major investment in Africa in years. The Tanzanian government sees the nickel project as the start of more raw material processing in the country.

Still, it’s unclear whether the West’s geostrategic ambitions will translate into a big increase in investment. Capital spending by the 20 largest miners will grow by about 12% through 2023, industry tracker Mining Technology predicts. That was lower than analysts’ estimates of what the world would need to meet climate goals.Duncan Wanblad CEO Anglo American said there were too few bankable projects in development. “I can’t count correctly,” he sighed. Benedikt Sobotka believes that “the only big capital deployment in the past 20 years has been the Chinese ecosystem” CEO Eurasian Resources Group. Part of the problem remains perception, according to a consultant to the mining industry. When U.S. investors “think about mining in Africa, they still think about cobalt, Congo and child labor”.

looking for gibberish

“The U.S. intentions are real,” added another executive, “but they don’t know what they’re doing.” African priorities are often not U.S. priorities. “My concern is that half the US delegation believes their own bullshit,” said another CEOadding: “Just being America is not enough.”

Sameh Shenouda, executive director of Nigeria-based pan-African fund Africa Finance, welcomes renewed Western interest in African mining, but he has two concerns. The first was that the project took too long to start due to bureaucracy in the United States.The second is that the United States promotes alliances ESG– Friendly mining investment won’t last under a Republican president.

When U.S. officials warn Africans against doing business with China, it sometimes comes across as condescending. “Americans have no idea what’s going on in our politics,” says a former adviser to an African president. He believes that China’s success in Africa is because their companies can complete projects in time for the next election.

Many African governments want more US involvement on the continent, but are in no rush to ditch China. “Zambia treats countries on a case-by-case basis,” said Paul Kabuswe, Zambia’s mining minister. African governments strike better deals. After all, says Mr Kabuswe, “Zambia has been mining for decades with little success.”

editor’s note (March 8, 2023): This article has been amended to clarify that Undersecretary of State for Economic Growth, Energy and Environment Jose Fernandez, not Anthony Bradley, initiated the Mineral Security Partnership in June 2022. Lincoln.

Related Articles


Please enter your comment!
Please enter your name here

Stay Connected

- Advertisement -spot_img

Latest Articles