Africa, China and the race for critical minerals: a new focus for FOCAC?

As Beijing prepares for the 2024 Forum on China-Africa Cooperation (FOCAC) summit, which will take place from September 4 to 6, there is a sense of anticipation about what the summit will bring. Established in 2000 at the request of African countries seeking greater coordination with China, FOCAC has become an important framework for dialogue and cooperation between China and Africa. Held every three years, alternating between Beijing and an African country as host, the summit is expected to attract a significant number of African heads of state; The 2018 Beijing Summit brought together more than 50 top African leaders and representatives of African organizations.

FOCAC is central to China’s engagement in Africa, especially in making development commitments that span economic, political and social domains. These commitments are generally organized around thematic priority areas, such as healthcare, agricultural development, trade and investment, industrial cooperation, infrastructure, green development, people-to-people exchanges, and peace and security. Financial commitments, a hallmark of FOCAC conferences, often attract the most attention – such as the $60 billion in new financing announced in 2018 and the $40 billion commitment in 2021. These commitments reflect the size and scope of China’s commitment to the continent.

While the main focus areas of the cooperation – agriculture, trade, industrial cooperation and infrastructure – have remained consistent over the years, FOCAC has also adapted to emerging global challenges. For example, the 2021 conference emphasized health and vaccine cooperation in response to the pandemic, with an increasing emphasis on green development and climate cooperation. However, despite the broad scope of topics covered at FOCAC, one crucial area remains noticeably underrepresented: mining and critical minerals.

This oversight is surprising given China’s strategic importance in crucial minerals and the importance of the mining sector to African economies. Minerals account for an average of 70 percent of total African exports and about 28 percent of the continent’s GDP. Nearly 90 percent of China’s imports from Africa consist of mineral fuels, ores, rocks, metals and other minerals.

Furthermore, the mining sector is a major source of foreign direct investment (FDI) in Africa. Mining represents the second largest share of Chinese foreign direct investment on the continent at 23.8 percent, surpassed only by the construction sector.

Africa holds approximately 30 percent of the world’s mineral resources, many of which are critical minerals – essential components for the transition to green energy, defense systems and other high-tech applications. The International Energy Agency predicts that global demand for crucial minerals used in clean energy technologies – such as lithium, copper, cobalt and nickel for batteries – will double by 2030. The extraction of crucial minerals thus offers a unique opportunity for economic growth and industrialization on the continent, as well as a strategic importance for China, which is investing heavily in securing these resources for its industries.

China has a dominant position in many critical mineral value chains, including rare earth elementscopper, graphite and lithium. China has a significant advantage in mineral processing and downstream production. For example, in the electric vehicle (EV) sector, while Australia leads in lithium production, Indonesia in nickel, the Democratic Republic of Congo (DRC) in cobalt and China in graphite, China, for example, controls more than half of the processing for these sectors. minerals. In the downstream phase, China produces three-quarters of all lithium-ion batteries and produces more than half of the world’s electric vehicles.

China’s dominance has raised concerns among the United States and its allies, which are actively seeking to reduce their dependence on China in the supply chains of critical minerals and clean technology. In 2022 the US, the European Union and their allies formed the Minerals Security Partnership (MSP), a coalition of 15 countries and regions focused on diversifying sustainable supply chains for critical energy minerals. The MSP has a clear intention to curb China’s dominance.

In 2023, Australia blocked the takeover of a lithium mine by a Chinese mining company. This year, both the United States and the EU imposed high tariffs on Chinese electric vehicles, with the US imposing a 100 percent tariff and the EU imposing tariffs of up to 37.6 percent.

Amid this great power competition, all parties are eyeing Africa’s crucial mineral resources. The EU has done that signed Memorandums of Understanding (MoUs) with four African countries (Namibia, DRC, Zambia and Rwanda) to strengthen partnerships for critical commodity value chains. The US has now done just that signed a trilateral MoU with the DRC and Zambia to support the development of the EV battery supply chain. Both the EU and the US have done so involved to support the development of the Lobito Corridor, which connects the Port of Lobito in Angola with mining regions in the DRC and Zambia, facilitating the transportation of critical minerals to markets in Europe and North America. However, these MoUs have yet to be translated into tangible investment objectives or financing actions.

China, on the other hand, has moved more quickly because its approach tends to be more output-oriented and characterized by rapid decision-making and implementation. In 2021 and 2022 alone, Chinese companies will do it invested more than $1 billion acquiring lithium projects in Zimbabwe. Benchmark mineral intelligence estimated that more than 90 percent of Africa’s predicted lithium supply in 2024 will come from projects at least partly owned by Chinese companies. In the field of cobalt and copper, China also has significant interests in mines in the DRC. Chinese investments in these countries go beyond simple extraction and also include increased investments in mineral processing.

Moreover, in February 2024, China suggested a $1 billion renovation plan for the Tazara Railway, which was originally constructed in the 1970s and connected Zambia’s Copperbelt region to the port of Dar es Salaam in Tanzania. This project competes directly with the Lobito Corridor in facilitating the movement of critical minerals from Zambia and the DRC.

Meanwhile, African countries are striving to go beyond being a mere source of raw materials. They are asserting their interest in value addition and developing local processing capabilities to capture a fairer share of profits across critical mineral value chains. Several African countries – including Zimbabwe, Namibia, Ghana and Nigeria – have banned the export of crucial raw materials such as lithium, bauxite and rare earth metals in a bid to boost local value addition. Another notable development is the agreement between the DRC and Zambia to jointly develop EV batteries using locally mined minerals.

As global demand and competition for crucial minerals increase, mineral relations between Africa and China are likely to become even more closely intertwined. While China seeks Africa’s resources and markets, Africa equally needs Chinese expertise, technology and human resources. However, African countries must be proactive in asserting their interests to ensure fair conditions that maximize benefits for their economies and citizens. Measures such as imposing export bans on raw materials, requiring investments in local value addition and renegotiating mining contracts are steps in the right direction.

Yet bilateral negotiations alone will not be enough. To secure a more equitable partnership, African countries must adopt a joined-up approach, negotiating collectively to ensure that their development priorities are respected and promoted. FOCAC provides an ideal platform for African countries to express their collective demands and secure China’s commitment to key agendas, including industrialization through value addition, infrastructure investment and greater alignment with Environmental, Social and Governance (ESG) standards ).

It remains to be seen whether the upcoming FOCAC summit will formally include cooperation on critical minerals in its agenda. Regardless of the outcome, it is clear that crucial minerals will continue to play an important role in economic relations between Africa and China. More dialogue is needed for African countries to ensure that this partnership remains dynamic, equitable and responsive to the evolving global landscape.