Reconsidering supply chains between the US and Africa

The recent critical minerals summit in Washington, which brought together officials from 54 countries, including several from Africa, appeared to be a diplomatic event on the surface. However, behind the scenes, it carried a significant message for investors: the US and its allies are prepared to invest in reshaping global mineral supply chains.

US Secretary of State Marco Rubio, in his address, steered clear of mentioning China directly. Instead, he highlighted the issue of heavily concentrated supply chains and warned that years of outsourcing had left advanced economies susceptible in terms of materials essential for clean energy and defense. The underlying implication was clear – new strategies and capital are required to secure these resources.

This shift in approach is already discernible in recent developments. For instance, Swiss commodities giant Glencore recently agreed to sell 40% of its copper and cobalt assets in the Democratic Republic of Congo to a US government-backed consortium for a substantial $3.6 billion, a valuation that sparked interest. Calisto Radithipa, co-founder of Botswana-based mining chemicals supplier Kemcore, pointed out that this deal signifies Western capital’s willingness to invest in securing non-Chinese control of critical assets.

Rubio’s broader strategy aims to ensure the sustainability of these investments. Plans were outlined for a Preferential Trade Zone with price floors designed to stabilize volatile markets plagued by oversupply and price suppression. The objective is to instill confidence in investors that non-Chinese projects can deliver reliable returns.

Furthermore, the US is advocating for a $12 billion strategic stockpile for critical minerals, a measure that the EU and Japan are also considering to create similar reserves to cushion shocks and combat market manipulation.

This shift presents a unique opportunity for African producers in countries like Angola, the Democratic Republic of Congo, Gabon, Nigeria, and Zambia. The recent Glencore deal demonstrates that Western governments are willing to make substantial investments. However, effectively leveraging this momentary advantage into a sustained position will necessitate careful planning rather than short-term gains.

Bright Simons from the Imani think tank raises a crucial point in a Semafor column, asserting that the value of Africa’s critical minerals is often misrepresented on the global stage. This mischaracterization can lead to flawed strategies and policies by distorting what truly matters in the discussion of critical minerals.