China and Russia make crucial mineral grabs in Africa as US snoozes – Community News
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China and Russia make crucial mineral grabs in Africa as US snoozes

Countries around the world are pushing for zero-emission targets, creating a bottleneck for critical rare earth elements (REE) such as cobalt, copper and lithium. These are essential components in the production of renewable energy technology, from batteries for electric vehicles to wind turbine blades. REEs also play a key role in the production of semiconductors and other electronics.

Access to these resources – both raw and refined – has never been more important. Just like oil was during the 20e century, crucial minerals are the main input for future economic growth. Governments and private companies are increasingly recognizing this, resulting in a global “gold rush” for these strategic minerals.

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Global annual demand for rare earth elements, a subset of “critical minerals” considered vital to economic security, is expected to increase from 208,250 metric tons in 2019 to a predicted 304,678 metric tons in 2025. REEs are not. really ‘rare’ — they occur all over the world, but deposits with economically useful concentrations are less common, reducing the number of financially viable mining projects.

Competition for the refining of REEs and other critical minerals is even more limited, as China has a monopoly on downstream processing. As of 2019, 80% of US refined REE imports come from China. In addition, China’s top mining company ‘China Minmetals Rare Earth Co’ has announced a merger with two other companies, creating a global strength in the strategic industry.

With accessibility limited by China and now COVID-related supply chain disruptions, another obstacle looming for REE stocks is the demand for more eco-friendly extraction methods. The extraction of rare earths involves environmental and political costs.

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REE extraction is now under scrutiny as environmentalist groups question the methods used to harvest these minerals. Furthermore, there are concerns about the loss of income and the ecological impact on impoverished communities such as Native Americans in the United States and ethnic minorities in Africa – a hotbed of critical mining.

Amid the rising social and environmental costs of mining in the West, less scrupulous countries like Russia and China are benefiting from rising demand. Despite Russia’s 4 . holdse The largest global supply of REEs, at an estimated 12 million tons, they have decided – along with China – to use political influence to negotiate mining deals across Africa, where labor is cheap and regulation is virtually non-existent. While China has entered the region with billions of dollars in Belt and Road financing, Russia is making its way through the strategic deployment of mercenaries.

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Africa, a hugely politically unstable continent, has offered Russian private security contractor Wagner an opportunity to profit from mineral sales and mining operations. The Wagner group uses its military tactics to support governments in times of conflict – and in return has benefited from lucrative mining deals and special diplomatic status within countries.

Russia plans to continue to spread its influence within the region through Private Military Companies (PMC) operations.

Geopolitical competition has centered in North and West Africa, where China and Russia mine and process REEs. This is mainly attributed to China’s increase in the Belt and Road initiative. As of October 2021, Chinese banks account 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 loan in 2019 is estimated at $7.6 billion, while Russia has mainly used the Wagner Group to project the power of the continent.

But Africa is not the only focus of Chinese mining initiatives. China has also led the way in investing in Latin America’s mineral resources while the US is dormant.

In Brazil, major Chinese companies such as Ningbo Zhoushan struck a lucrative deal with Brazilian mining giant Vale to export iron ore to mainland China for processing. Outside of Latin America, China and Russia have explored expansion opportunities in Eurasia, their backyard. Essential to their long-term economic future, the Russian government pledged to invest more than $1.5 billion in domestic mineral projects, hoping to become an REE powerhouse by 2026. The Chinese strategy in Eurasia has been somewhat different towards Mongolia, where companies have invested significantly in mining activities.

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Much like the extraction of hydrocarbons essential to economic security, REE mining has become an increasingly political problem. Leaders in the political and private sectors – at least in the West – must be sensitive to the potentially destructive effects of such mining activities, both at home and abroad.

In addition to developing more environmentally friendly extraction techniques (which are still economical), the West must embrace new methods to increase access to minerals. This should include developing national strategic critical mineral reserves that can be used in times of supply shortages – much like the strategic petroleum reserve (SPR) in the United States today. The recycling of minerals, substitutes and prospecting technology should also be pursued. The latter will be vital in identifying rare-earth deposits in places less likely to have serious economic impacts, such as the seabed and even space.

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Indeed, the potential for asteroid mining has sparked the interests of major geopolitical powers as an alternative to REEs. Asteroid mining can lead to unfathomable supplies of iron, nickel and platinum. This would reduce the environmental impact of mining on Earth, reducing concerns about deteriorating climate conditions. While 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 crucial minerals for the energy transition and future economic growth is undeniable. How nations and private companies decide to ensure environmentally sound, affordable and reliable access to these resources will have far-reaching geopolitical, environmental and social consequences.

With help from Riley Mother and James Grant