By Otaviano Canuto & Sabrina Emran
The clean-energy transition has fueled the global race for critical minerals, transforming elements like lithium, cobalt, and rare earths into strategic assets.
The intensifying competition for resources at the heart of this developing conflict revolves around the growing tension between China and the United States. Both nations understand that mastering control over mineral supply chains is crucial for achieving supremacy in technology.
Key minerals – particularly lithium, nickel, cobalt, manganese, and graphite – are
essential
To areas such as semiconductors, electric-vehicle batteries, renewable energy, and defense.
Rare earths, for example, are vital for the permanent magnets used in wind turbines and EV motors, while the power grids that sustain modern economies rely on huge quantities of aluminum and copper.
The
geopolitical importance
The demand for critical minerals has risen significantly in recent years, fueled not just by their importance in the green transition but also by the growing vulnerability of centralized supply chains. Currently, China holds a prominent position in this area.
dominates
Global mineral processing handles over 60% of the world’s lithium production, 85% of its rare-earth elements, and 95% of its manganese.
This supremacy has led to new strategic weaknesses. A key illustration of this is China’s recent actions.
export restrictions
Regarding gallium and germanium, this highlights how crucial materials can be leveraged by major nations to secure a technological advantage.
In the end, the path of the green transition will rely not just on the location of mineral deposits but also on how effectively governments adjust their policies.
As nations move away from fossil fuels, they may simply exchange one type of resource vulnerability for another if they fail to address the intricate interplay between the availability and consumption of minerals.
However, many current discussions emphasize increasing production capacity, often neglecting the possible improvements in efficiency, along with advancements in recycling techniques and material replacement strategies.
Significantly, China’s command over resources does not stem from extensive mineral deposits but rather from careful planning. Despite owning just a portion of the globe’s minerals, China has invested years enhancing its refining capacities via focused industrial strategies, allowing it to dominate crucial parts of the international manufacturing chain. Consequently, technology has become the pivotal factor in shifting geopolitical dynamics.
Although the US leads in advanced semiconductor design and manufacturing tools, China holds sway over clean-energy supply chains, encompassing everything from solar panels to batteries. However, the US still relies entirely on imports for 15 crucial minerals—including gallium and rare earth elements—thus remaining dependent.
more than 50%
dependent for another 34.
Considering that China supplies almost half of these minerals, it is evident that America’s reliance on resources represents a significant strategic risk to vital industries such as semiconductor manufacturing, defense, and clean energy. Acknowledging this increasing vulnerability, the previous US president
Joe Biden
signed the 2022
CHIPS and Science Act
to boost semiconductor manufacturing.
President Donald Trump’s administration is now focusing on an increasingly inward-looking strategy designed to
accelerating
the retrieval of essential minerals whilst
streamlining
The approval procedure for mining activities on government-owned property.
However, mineral security cannot be attained solely through domestic production, hence the Biden administration collaborated with partners such as Australia, Canada, and the European Union to create the
Minerals Security Partnership
– an effort focused on “befriending” mineral production. In contrast, Trump has taken a more aggressive stance, threatening to annex Greenland “
one way or another
” and attempting to
pressure
Ukraine enters into a critical mineral agreement.
The competition for essential minerals might lead to significant geopolitical consequences, with resource-abundant developing nations being wooed by both the United States and China. Concurrently, international businesses confront the possibility of splintered supply networks split according to political boundaries.
Africa, home to
roughly 30%
The significant concentration of known mineral deposits—including 85% of the globe’s manganese and 80% of its platinum and chromium—has become a central issue in resource contention. This is particularly evident in nations such as the Democratic Republic of the Congo (DRC), which possesses approximately 70% of the planet’s cobalt resources, along with platinum-abundant South Africa.
Nevertheless, the gap between Africa’s abundant natural resources and its underwhelming economic progress continues to be stark. Numerous African economies, such as that of the Democratic Republic of Congo, depend largely on exporting unprocessed materials, having not invested significantly in industries for value addition.
As a result, Sub-Saharan economies typically capture, on average,
just 40%
Of the possible income from their natural resources – a gap that indicates a more profound systematic failure to realize the complete economic value of these assets.
Bauxite serves as an example highlighting the significant economic potential squandered from exporting unprocessed materials. Although crude bauxite ore has a price tag of around
$92 per ton
, its purified form – aluminum – commands prices around
$2,438 per ton
.
Even though the Democratic Republic of Congo holds a significant portion of the world’s cobalt reserves, it still largely depends on exporting unprocessed materials. This heavy reliance, along with insufficient vertical integration and limited economic diversity, makes the nation susceptible to severe economic setbacks should international cobalt prices drop significantly and persistently.
Providing shared advantages for Africa’s mineral-abundant nations and international sectors reliant on these resources necessitates shifting away from extractive practices that have historically defined the worldwide economic landscape. The United States is ideally suited to present a different approach. To achieve this, it should advocate for a new model.
“E3” framework
: financially viable, ecologically responsible, and morally sound.
Besides focusing on technological advancements, the United States’ strategy for critical minerals ought to incorporate moral involvement and the building of necessary structures.
The
Lobito Corridor
— A U.S.-backed initiative aimed at refurbishing the railroad linking Angola to inland cobalt and copper mines in the Democratic Republic of Congo and Zambia — illustrates how focusing on domestic processing of strategic minerals can create economic benefits for local communities instead of depending exclusively on unprocessed exports.
Encouragingly, the US has
signaled
Its readiness to interact with mineral-abundant Sub-Saharan nations highlights potential. However, the sparse involvement of U.S.-based private mining companies in this area, coupled with the fast-changing global political scene, emphasizes the necessity for a creative, strategic strategy aimed at generating long-term value and fostering advantageous collaborations for all parties involved.
Otaviano Canuto, a former vice president and executive director of the World Bank, executive director of the International Monetary Fund, vice president of the Inter-American Development Bank, and deputy minister of finance of Brazil, is a non-resident senior fellow at the Brookings Institution and a senior fellow at the Policy Center for the New South. Sabrine Emran is an economist at the Policy Center for the New South.
Provided by SyndiGate Media Inc. (
Syndigate.info
).
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