Battleground Africa: In a world thirsting for its critical minerals, respect is the new currency

February 10, 2024

Frank Giustra, The Fiore Group

Originally published in The Toronto Star on January 31, 2024 as contributing columnist 

By Frank Guistra

“The new scramble for resources on the continent offers an opportunity for Africa to reset its relations with more powerful external actors. Africa’s wealth of critical minerals will be essential to help the world achieve its energy transition. In return, African leaders should negotiate smart deals that ensure the continent draws just recompense for the minerals on its soil — and ensure those benefits are spread evenly to its citizens.”

Dr. Comfort Ero, president and CEO, the International Crisis Group 

… The world is already facing an enormous deficit in minerals for our future needs, but with the transition to clean energy, the projected deficit will be almost impossible to fulfil.

Seemingly overnight, it’s as if the world awoke from a deep slumber and is now scrambling to secure many of the critical minerals we need to make that transition a reality.

The mineral list is extensive; it includes copper, cobalt, nickel, lithium, uranium, iron ore, rare earths, manganese, and graphite, to name a few. Some estimate by the year 2040 we will need to mine four times the critical minerals we produce today.

In that same period, we will need to mine more copper (one of the most important minerals) than all the copper mined in our entire history. A staggering $200 billion (all figures in U.S. dollars) needs to be invested in the supply of critical minerals in this decade alone if we are to ever expect to meet our net zero goals.

When you consider the lead time required to find and develop mines — upwards of 10 to 20 years — you can appreciate how daunting a challenge the world faces.

Complicating this dilemma, the race to secure critical minerals is occurring at the same time the world is undergoing de-globalization. The balkanization of supply chains, with countries on-shoring and friendshoring, only intensifies the competition for mineral supplies. It feels like a resource war in the making and there is evidence that battle lines are being drawn.

Recently, China restricted graphite exports. Canada declared it would ban Chinese investment in critical minerals. Indonesia is calling for an OPEC-style cartel of these important metals. The list goes on. This competition is quickly becoming a national security issue, especially for the West, which is not as richly endowed with minerals as the emerging markets. As Credit Suisse’s Zoltan Posner put it, “Our commodity, your problem.”

Africa is arguably the most mineral rich continent on the planet

At the epicentre of this scramble is Africa, arguably the most prolific, mineral rich continent on the planet. For centuries, Africa has been subjected to a litany of one-sided relationships with colonial powers coveting its riches. After a relatively calm period that followed the struggle for independence and its chaotic aftermath, much of the continent is once again experiencing political upheaval and conflict.

Numerous Jihadist insurgences plague the continent, namely in the sub-Saharan Sahel region and in Mozambique as well. Rwandan-backed rebel forces are also active in Eastern DRC. The U.S. is now in its 20th year of a counterterrorism campaign whose only visible accomplishment is a parabolic increase in insurgent attacks that went from nine in 2003 to 6700 in 2023.

After failing to repel insurgent attacks in the Sahel and West Africa, neo-colonialist France is now abandoning the region. The private Russian military group, Wagner (which acts as proxy for the Kremlin), is securing mineral rights in exchange for protecting certain authoritarian regimes from Jihadist incursions in at least four African countries and is courting several more for its “services.”

There have been seven military coups (nine if you count that it happened twice, in Mali and Burkina Faso) in just the last three years. Lastly, Sudan is in the midst of a brutal internal conflict between two rival military leaders resulting in 12,000 casualties and six million displaced people. And what is the prize most belligerents are after, regardless of their public proclamations? Controlling and benefiting from the region’s resources, of course.

Beneath all this turmoil, one country, China, has managed to avoid getting embroiled in conflicts while quietly exploiting the region for its resource needs.

China is investing in development and infrastructure

While the rest of the world wasn’t paying much attention over the past two decades, China, demonstrating its well-established long-term perspective, has made significant inroads throughout the continent. To date, China has negotiated strategic partnerships with 44 African countries. Notably, China’s interest in the region goes far beyond developing mineral and oil resources. More importantly for Africa, China is investing in development and building infrastructure. Its annual investments have increased from $75 million in 2003 to $5 billion in 2023.

China also has a strong interest in establishing diplomatic relations (it has more embassies than the U.S.) and fostering trade, establishing itself as Africa’s largest trading partner. It even has space programs with nine African countries. The West, especially the U.S., loves to deride these investments, labelling the strategy as “debt-trap diplomacy.” But the facts tell a different story. While no country is entirely altruistic when it comes to foreign policy and investment — China is doing what’s good for China — African governments generally see China being more altruistic compared to the West.

So, how does the rest of the world square its needs with the needs of Africa? Let’s start with what Africa doesn’t need.

Africa shouldn’t have to resort to military coups when its elected leaders fail them, or one corrupt leader replaces another. Likewise, it shouldn’t have to pay foreign mercenaries with their resources in order to protect their authoritarian regimes. It can well do without a failed U.S. counterterrorism campaign which was launched with no clear objective or exit strategy.

It doesn’t need to be lectured on structural reform by western institutions whose host countries would never impose those same badly needed reforms in their own economies. Lastly, it is pointless and counterproductive to blame China, labelling them as part of an axis of evil, and deriding their investments in Africa as being unfair.

Investment needs to benefit ordinary Africans

What Africa needs is to be treated with respect. It needs investment, development and trade that goes beyond just mineral extraction. In short, it needs to benefit ordinary Africans. It’s no coincidence that the 74% of Africans in the bottom quartile of the Human Development Index reside mostly in the countries that have the richest mineral endowments.

As for those countries that are in dire need of Africa’s minerals, they should stop the demagoguery and find a way to compete with China’s approach. It won’t be easy, for the West in particular. China has the advantage that it can negotiate government to government agreements, which African governments prefer, whereas the West relies on the corporate world to do its work for them.

The Kingdom of Saudi Arabia (KSA) is one nation taking on this challenge. To achieve its ambitious Vision 2030, it will need plenty of critical minerals and has turned its focus towards the “super region” which includes West Asia, the Middle East, and Africa. Much like Chinese strategic planning, KSA also takes a long-term view to its own development and is in a position to negotiate government to government deals. It also has a lot of wealth it can deploy. Like, a lot. Crown Prince Mohammed bin Salman Al Saud (MBS) has committed to investing $25 billion towards clean energy by the end of the decade and looks to invest another $15 billion to acquire stakes in mineral projects in return for offtake agreements for the physical metals. Additionally, it proposed $10 billion to finance and ensure Saudi exports through 2030 and an additional $5 billion in development financing for African nations.

Interestingly, the Wall Street Journal, citing people with knowledge of the talks, reported that the U.S. and Saudi Arabia are in talks to secure metals in Africa needed to help them with their energy transitions. This approach is smart and might solve America’s dilemma in competing with China. KSA, which has working relationships with all the great powers, is uniquely positioned to somewhat copy the Chinese approach.

The Kingdom is not the only recent entrant in Africa. Qatar, along with the UAE (Saudi’s frenemy), and to a lesser extent Turkey, are also looking to invest in Africa. We can only hope they take a similar approach.

If we hope to avoid ongoing turmoil and deadly conflict in Africa, it’s imperative that the global community secures its mineral needs while creating an environment that will benefit the fast-growing population of ordinary Africans. These objectives do not need to be mutually exclusive.

About Frand Giustra

Mr. Giustra is the CEO of Fiore Group, managing a diverse portfolio in resources, entertainment, and lifestyle. He founded Lionsgate Entertainment and leverages his entrepreneurial spirit in philanthropy, co-founding Acceso to combat global poverty. His Giustra Foundation addresses humanitarian challenges, with a focus on women, children, and refugees, partnering in the Global Refugee Sponsorship Initiative. Since 2020, he co-chairs the International Crisis Group, offering conflict resolution advice. Giustra also serves on multiple boards across non-profit and corporate sectors. A good deal of his time and resource now goes into supporting charities within both my international and domestic charity foundations as well as organizations I have co-founded.

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MiningIR hosts a variety of articles from a range of sources. Our content, while interesting, should not be considered as formal financial advice. Always seek professional guidance and consult a range of sources before investing.
James Hyland, MiningIR