Rare-earth elements: Africa launches a new competition

Rare-earth elements: Africa launches a new competition

In the Periodic Table of Elements, 17 elements – known as “rare-earth elements” – feature prominently in the calculations and policy concerns of states.

Rare-earth elements are fundamental elements of modern societies and industries of the 21st century, being vital components in numerous products, from smartphones and monitors to wind turbines, photovoltaic panels, and electric machines, up to lasers and radar.

The difficulty in substituting for other materials makes rare-earth elements even more strategic. In fact, it must be pointed out that rare-earth elements are not really rare – for example, cerium is more abundant than copper – and there are rare-earth element deposits in many parts of the world.

World rare earth deposits
World RE elements deposits. Source: USGS

What makes these elements especially “rare” is their rarity of concentration: they are not present pure, in nature, but in relation with other kinds of materials.

Although it is a market with low volumes, those in a dominant position could benefit from important geopolitical and negotiating levers vis-à-vis other countries, given the importance of rare-earth elements in several key sectors.

China’s centrality

To date, the market is strongly dominated by China, which produces about 60% of the world’s rare-earth elements, as well as processing and refining about 80%, thus ensuring a central role in the world’s supply chain.

This leads to an excessive dependence of the world’s major economies on Chinese imports — 80% and 98% of US imports and those of the European Union come from China, respectively. The concern to have imports decrease or even stop, which could seriously harm economies, industries and decarbonization plans, leads countries to look for productive alternatives.

These concerns became apparent in 2010, when Beijing decided to hold back exports to Japan for political reasons. That year, 97 percent of the world’s rare-earth elements were estimated to have come from China.

The (geo)political escalating confrontation between the US and China is intensifying tensions and concerns. China has on several occasions threatened to reduce or even ban exports of some rare-earth elements to the US, which helps push countries to look for new production centres, in order to reduce Chinese dominance – a process already underway after 2010.

World production of RE elements. Source: UNCTAD
World production of RE elements. Source: UNCTAD

The Rise of Africa

In this context, Africa has the opportunity to emerge as a new production centre, with this launch of a new competition on the continent among the main global players. In fact, there are many rare-earth elements deposits in Africa, particularly in the countries of East and South Africa, such as South Africa, Madagascar, Malawi, Kenya, Namibia, Mozambique, Tanzania, Zambia and Burundi.

However, Africa has only great potential at the moment. The only current project in Africa is Gakara in Burundi, while the Steenkampskraal repository in South Africa could be operational in the short term.

In any case, some African countries have started to develop projects at different stages, including Namibia (Lofdal Heavy Rare Earths Project), Malawi (Kangankunde), Angola (Longonjo Project), Tanzania (Ngualla Rare Earth Project), Uganda (Makuutu Project) Madagascar (Tatalus) Mozambique (Xiluvo REE Project) and South Africa (Glenover and Phalaborwa Project).

Obstacles on the table

The launch of new projects is “hampered” by current market laws, which pose several challenges: the presence of considerable costs, the need for large investments, to which are added the political-environmental and social acceptability assessments.

For China’s dominance in world production and refining, the strong political commitment to developing the sector through industrial policies and state support was crucial, more than the availability of domestic reserves.

In any case, if the market impedes the emergence of alternatives outside China, what could, on the contrary, encourage them, is the increasing politicization of rare-earth elements. This will increase its strategic significance by encouraging States to increase their support for different projects.

The moves of the different countries

First of all, the United States is determined to reduce its vulnerabilities to China as much as possible – a common feature of the last two administrations. In 2019, the U.S. Department of Defense began negotiations with Malawi and Burundi to evaluate support for some projects with the aim of securing rare earth supplies from the African continent.

The European Union is also determined to reduce its almost total dependence on China, which could hinder the implementation of the Green Deal. While the EU intends to increase its strategic autonomy in this area too, by developing some domestic deposits and recycling materials, it said in September 2020 that it was ready to establish new strategic partnerships with African countries for the supply of these elements.

Other players like Australia and Japan want to increase their presence in Africa. For example, Australia, despite being the world’s second-largest producer of rare-earth elements, is continuing its efforts to expand rare earth supplies and reduce Chinese dominance, in line with Washington’s interests.

Two Australian companies are engaged in project development in Tanzania (Ngualla Mining Project) and Malawi (Makuutu Project). After the 2010 events, Japan is also supporting some projects in Africa, such as Namibia and South Africa, through Japan Oil, Gas and Metals National Corporation.

China will not be expelled from the competition. Indeed, Beijing may be forced to increase its presence on the African continent to ensure supplies of rare-earth elements in the future if it wants to implement its ambitious industrial plans in the field of energy and technological transition.

Since 2018, China has become an importer of certain RE elements due to strong growth in domestic demand and restrictions on illegal production, including on environmental grounds.

Thus, China will move to secure foreign supplies, unavoidably even in Africa. On the African continent, China could provide infrastructure investments and finance in return for mineral and energy exploration resources and rights.

If state and financial support are essential to creating productive alternatives, China could already start from an advantage, thanks to its geo-economic influence in Africa, its role as a major consumer, and its control of refining.

It will therefore be necessary for other states to ensure advantageous conditions for African countries so as not to fall behind in the race for rare-earth elements, aware that the road to reducing Chinese rule will not be easy.

Source: ISPI

Photo by Waldemar Brandt

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