Prospects and challenges for the export of rare earths from Sub-Saharan Africa to the EU

Kohnert, Dirk (2024): Prospects and challenges for the export of rare earths from Sub-Saharan Africa to the EU.

Abstract

The African continent is increasingly becoming a battleground in the race between superpowers for access to critical minerals needed for the 'Green Revolution', such as rare earth minerals (REE). Companies from China, the USA and Russia play a major role. In most cases, critical minerals are mined by international mining companies supported by their governments and organizing complex global value chains. So far, China has dominated supply chains and has secured mining contracts across sub-Saharan Africa (SSA). Currently, China produces 58% of all REEs worldwide. It is the main importer of minerals from Africa, with mineral exports from sub-Saharan Africa to China totalling USD 10 bn in 2019. Its dominance of the global rare earths market is rooted in politics, not geography. Rare earths are neither that rare nor that concentrated in China. Beijing has adopted a strategy of imports, dumping and control of rare earths that is hardly consistent with WTO rules. Therefore, in June 2022, a newly founded 'Minerals Security Partnership', consisting of the USA, the EU, Great Britain and other Western industrialized countries, invited mineral-rich African countries to counter Chinese dominance. These included resource-rich countries such as South Africa, Botswana, Angola, Mozambique, Namibia, Tanzania, Zambia, Uganda and the Democratic Republic of Congo. The West's push became even more urgent after Beijing imposed export controls on the strategic metals gallium and germanium in July 2023, sparking global fears that China could be next to block exports of rare earth or processing technology. Because African markets are small, they are forced to rely on foreign financing. However, so far, foreign direct investment in rare earth production has confirmed the 'pollution haven' hypothesis about the environmentally harmful effects of FDI flowing into the affected countries. Although the full potential of rare earths in SSA has remained largely untapped due to low exploration, the dark side of the energy transition is becoming increasingly visible. These include pollution of soil, air and water as well as inadequate disposal of toxic residues and intensive water and energy use, occupational and environmental risks, child labour and sexual abuse as well as corruption and armed conflicts. In August 2023, Nigeria, Africa's largest economy, suspended certain illegal Chinese mining activities within its borders, including the activities of Ruitai Mining Company due to its involvement in illegal titanium ore mining. Namibia and the DR Congo followed suit.

• Item Type: MPRA Paper
• Language: English
• Keywords: rare earths; energy transition; climate change; pollution; emerging markets; Minerals Security Partnership; Sub-Saharan Africa; EU; South Africa; Nigeria; DR Congo; African Studies
• Subjects: D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D52 - Incomplete Markets; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E23 - Production; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F18 - Trade and Environment; F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F51 - International Conflicts ; Negotiations ; Sanctions; F - International Economics > F6 - Economic Impacts of Globalization > F63 - Economic Development; F - International Economics > F6 - Economic Impacts of Globalization > F64 - Environment; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L6 - Industry Studies: Manufacturing > L61 - Metals and Metal Products ; Cement ; Glass ; Ceramics; L - Industrial Organization > L6 - Industry Studies: Manufacturing > L63 - Microelectronics ; Computers ; Communications Equipment; L - Industrial Organization > L7 - Industry Studies: Primary Products and Construction > L72 - Mining, Extraction, and Refining: Other Nonrenewable Resources; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N17 - Africa ; Oceania; N - Economic History > N5 - Agriculture, Natural Resources, Environment, and Extractive Industries > N57 - Africa ; Oceania; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q33 - Resource Booms; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q53 - Air Pollution ; Water Pollution ; Noise ; Hazardous Waste ; Solid Waste ; Recycling; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification

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