Can Africa win the mineral race between China and the West? Russell
Two rail projects worth billions of dollars in Africa. One project was aimed west and the other east. The one backed by Western nations, and the other by China. Both aim to ship huge quantities of critical minerals. Welcome to the new race for Africa.
It is estimated that the Lobito rail line will cost $6 billion when it is completed in 2030. The 1,050 km (1,700 miles) of track will take mainly copper and cobalt west from the Democratic Republic of the Congo and Zambia to the port of Lobito, which is located in Angola.
The United States and Europe are providing a large amount of funding to upgrade and build new railway lines to increase the capacity to 4.6 millions metric tons annually. TAZARA, a 1,860 km line, links the same mineral rich parts of Zambia and DRC with a port in the Indian Ocean that offers faster sailing times to China or other Asian markets. It is similar to the Lobito Project in that it involves a rehabilitation of a colonial-era railroad. The Chinese are planning to spend $1.4 billion upgrading its annual capacity to 2.4 millions tons.
These two projects represent the efforts of the world's major powers to control and source the minerals required to power industrial economies, and to drive the energy transition.
They also demonstrate the different ways that Western and Chinese countries are attempting to achieve their goals of supply security.
African countries are stuck in the middle, blessed with their natural resources but cursed by an absence of coordinated policies to prevent them from being?exploited' by stronger nations. They are also too often hampered by poor governance, and unable to offer consistent, reliable investment regimes.
The African countries today have a much greater choice than they did during the colonial conquest two centuries ago.
The 'rules' are set by the 'partners, who can decide on their own. If they do it right, they will benefit from more investment, new jobs, and increased revenue through taxes and royalties.
The models are slightly different in that the Western countries prefer private operators in conjunction with public partnerships, funding, and building mines and transportation infrastructure.
U.S. WOOS At this week's Mining Indaba in Cape Town, one of the most significant changes was the United States' shift away from the combative and bombastic rhetoric of Donald Trump to a focus on promoting investment and trade.
This tacit admission may be an acknowledgement that insulting nations that you depend on for their resources will not work. But U.S. officials were out and about promoting their investment capital and willingness to re-risk projects by guaranteeing prices and offtake. The United States could move forward with new mines and infrastructure if African countries are willing to look past Trump's insults in the past and the gutting of U.S. aid. The U.S. "vault", which will contain critical minerals, will require African resources. A meeting last week of over 50 countries showed that the Trump administration is serious about building and securing metal supplies.
Will efforts by the United States and, to a lesser extent, the European Union be enough to wean African countries from Chinese investment? Chinese companies have tended to invest in a more comprehensive manner, exploring, building, operating and transporting minerals.
The massive Simandou Iron?ore Mine in Guinea is currently ramping up its 120 million ton capacity per year.
The project languished for years as Western companies struggled with a viable plan to make it successful.
Chinese investment and technical expertise has brought this project to life. Rio Tinto is a minor partner, but the ore will be almost exclusively shipped to China.
China has also had a 'first mover advantage' in Africa for many decades.
The question is, for African countries, whether China's investment to extract minerals from the continent has been mutually advantageous or if it has been skewed toward Beijing. It is then a question of whether the West and its trading and mining companies will be able to offer something better.
It is almost certain that more investment will be made to exploit Africa's mineral resources, which in turn will increase competition and reduce risk.
Is the prize large enough for everyone to win? It is possible, but will require a lot of effort and collaboration. The track record in Africa for this is not good.
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These are the views of the columnist, who is also an author. (Editing by Stephen Coates).
(source: Reuters)
