Global Rare Earth Shifts: Creating Tensions and Opportunities
Africa sits in a pivotal position at a point where critical minerals and rare earth supply and manufacturing has become a global focal point in current global trade wars. The past few weeks have seen much activity, talks, threats and significant moves by the major global markets of China and the USA around the supply-chain of these minerals.
Growing geopolitical shifts and moves to secure future manufacturing of the exploding tech based industries, are certainly central to almost all discussions and investments in mining and metal / rare earth processing and manufacture.
China, facing further trade talks with the US next week has certainly found a fulcrum of leverage over the US by implementing wide-scale restrictions on rare-earth exports that will inhibit manufacturing of goods such as Electric vehicles as well as tech related products. This sets a fascinating scenario and major supply-chain uncertainties that is likely to ignite fierce response from the Trump administration.
The US has in the last week made a major move by enticing a major rare-earth manufacturing enterprise to relocate its planned groundbreaking rare earths refinery from the UK after the company involved, Pesana, decided to seek investment in the United States instead. Pensana has spent the past seven years developing a rare earths mine in Angola where the US is actively investing in rail and ports infrastructure. The $268m (£185m) project, is one of the largest of its kind in the world, and is set to begin delivering raw materials in 2027.
But Where Does Africa Sit on the Spectrum of the Investment Decisions?
Africa is estimated to hold around 30% of the world’s critical mineral reserves. Among them are minerals essential to global defence, aerospace and green energy supply chains, such as titanium, graphite, lithium, beryllium and rare earth elements (REEs). Equally vital are gallium, germanium and silicon, which serve as key inputs for semiconductor manufacturing that are key to the Artificial Intelligence industry and the rapid growth of global data infrastructure such as data centres.
Demand for these minerals is projected to skyrocket over the coming years, driven primarily by increased demand for renewable energy and electric mobility technologies. Depending on specific modelling assumptions employed, it is estimated that overall mineral demand will increase by a factor of between two and three by 2030 and continue to rise through 2050. For specific minerals, such as lithium and graphite, demand projections are even steeper. These demand surges create particular challenges given that the lead time for bringing new mines online, from discovery to production, currently takes an average of eighteen years globally.
Despite the growing significance and growth trajectory, specific minerals such as the Platinum groups of metals or PGM’s, where Africa, and specifically South Africa holds the vast majority of global deposits – around 60%, there has been little investment in new exploration and production volumes have decreased over the last three years. Painfully this is due to poor regional policy and government inaction on issuing new mining licences.
Investment in Critical Minerals Exploration, 2021-2024
The Global investment pattern for Critical Minerals has seen a significant boost over recent years, rising from around $5 billion in 2021 to just under $7 billion last year.
Significantly, areas such as Australia and latin America, have gained rapid investment growth while the entire African continent has seen marginal growth with the entire continental investment value almost half of what Australia sees individually.
Call For African States to Realign Priorities
There is much at stake for the future of Africa, and there is positively a large ground-swell of dissatisfaction with corruption and maladministration that has seen the continent lose opportunities to grow and be part of waves of development, that other regions such as Singapore have harnesed, bringing investment, development and growth to their nation.
Priorities for some Africa’s leaders are astoundingly counter productive to growing regional stability, investments and providing opportunity for economic growth. For the most part African leadership appears to be tone deaf to the urgent need to shift priorities and build continental growth and prosperity for all based on these global supply chain changes and major supply-demand curves for one of Africa’s greatest assets.
Ongoing regional squabbles over scraps of assets and money, are resulting in poverty and loss of life across the continent and have to come to an end. While policy overhauls on investments plus infrastructure developments devoid of corruption surcharges are among key requirements for a flood of pent-up investment potential to happen.
Africa currently leads the global share of regional conflict by a large margin while global mining groups are backing away from Africa due to policy uncertainty, with several instances of mines being seized by African states this year. The nett result is a global state of “Hands-off” from investors.
The Frazer Institute, that annually measures global investment attractiveness, only has five African states in the top half of its list of 82 countries measured for ease of conducting mining operations. Pointedly there is not a single African state in the top ten with the highest ranking country, Morocco sitting at 18 with Botswana at 20. South Africa, despite its great rare earth and critical mineral potential sits at a disturbing 62nd spot on the ranking.
Global Shifts Don’t Wait For Laggards
With the G20 and B20, about to be held on Africa’s shores for the first time ever, there is a rush of sentiment about highlighting the need for investments on the continent. However, policy frameworks and stability as well as prioritising regional infrastructure has by and large been neglected.
In South Africa, the administration has put emergency repair operations in place prior to the event to be hosted there. The attempt is to overcome massive maintenance failures by the government over decades, that has led to Johannesburg, once the crown jewel of African cities, disintegrating into an infrastructure nightmare with power, water and transport structures disintegrating.
These type of failures are too commonplace and investors are not blind to the neglect or the risk that policy gaps or failures hold for potential investments. The much lauded (by African leaders) African Continental Free Trade Area (AfCFTA), was adopted over a decade ago in 2012 and has 54 African states as signatories. Yet despite its potential, the program that was intended to deepen the economic integration of the African continent, in accordance with the Pan African Vision of “An integrated, prosperous and peaceful Africa” is far removed from the reality on the ground.
It is past time that Africa needs to awaken and the leadership of Africa needs to start paying attention to groundswell movements or be replaced with leadership that takes an ethical and future facing position to build the continent towards its proper potential that will position the continent to take advantage of opportunities and not of its citizens, businesses and investors.
