Dear Friends,

In 2022, we produced a special briefing on commodities which departed from the traditional briefing format and instead took a close look at one topic — Africa’s varied and vast mineral resources. I return to this briefing now in the context of: a world reeling from expensive commodities, Wagner’s vast network of operations across the continent (see past special), rapid inflation, Europe at war, and pandemic-induced supply chain disruptions.

As with any complex topic, it is difficult to know where to begin. It is probably appropriate to start, however, by appreciating the role of African commodities in supplying global industrial and technological advancement. The matter is layered with economic, political, and historical questions involving Africa’s colonial past, resource abundance, and the continent’s geopolitical relevance today.

Looking to history as a guide, all African states at some point experienced the extracting forces, whether direct or indirect, of the imperial powers — Belgium, Britain, France, Germany, Italy, and Portugal. No country, however, is more emblematic of colonial extraction of raw materials critical for foreign development than the Congo.

In the Congo, the Lever Brothers Corporation (now Unilever) made Belgian Congo the paradigmatic ‘concession colony’. Under King Leopold II’s franchise, the King and the Corporation extracted vast quantities of rubber and palm oil for early European industry. In its wake, a trail of limbless labourers and 10 million dead (see Adam Hochschild’s King Leopold’s Ghost). Similar corporate concessions were made by the British to mining giants in their colonies, notably in South Africa (gold and platinum) and then Rhodesia and Northern Rhodesia (now Zimbabwe and Zambia) with its huge deposits of diamonds and copper.

For the scale of these extractive industries, see the graphic below which uses geospatial data to depict the impacts of cash crop production. It shows the long run effects on local development in terms of urbanization, road infrastructure, night-time luminosity, and household wealth. The legacy of the colonial economic system in Africa in turn had a negative feedback loop on weak institutions and spatial inequalities (CEPR).

Today developed nations, including China, are desirous of new rare earth and critical minerals. As Twain put it, history often rhymes; with its rare earths Africa is once again the set on which the world powers play out the (mis)deeds of the day.

When there is demand for raw materials, markets will find supply. And this supply is often found in Africa. The continent is home to ~30% of the world’s mineral reserves, 12% of the world’s oil, and 8% of the world’s natural gas reserves (UNEP, 2021). Gold and petroleum are widely available, and Africa has more diamonds than any other region. In 2019, Africa produced ~1bn tonnes of minerals worth $406bn. Beyond mineral wealth, Africa is a top producer of agricultural commodities like tea, coffee, livestock, wood, cotton, tobacco, cloves, and fish.

In its September 19th 2020 and April 3rd 2021 Editions, the Economist produced two exceptional pieces on the role of rare earths in industrialised economies. In the later edition, the publication dedicated a two-part special entitled the ‘the scramble for commodities’ an apparent harking to the infamous ‘scramble for Africa’ in 1884.

These works, amongst others, capture how the world’s great powers have identified raw and rare earths as essential to national economic and military security. The present-day tech producer requires bauxite, cobalt, coltan, lithium, neodymium, and praseodymium to supply the modern consumers’ voracious diet of electric vehicles (EVs), laptops, and smartphones. Beyond market consumption, these minerals are critical for military and commercial industrialists in their production of complex military equipment, aircraft engine alloys, semiconductors, and electroplating. More recent demand comes from those green energy producers with solar PVs requiring a concoction of rare earths to convert sunlight into electricity.

Today, China controls some ~95% of the rare earths market from sourcing to processing. Private, public and state-owned Chinese firms have operations extending from its southern border to the cobalt-rich mines in the Democratic Republic of Congo (DRC), the bauxite deposits in Guinea and coltan fields of Western Burundi. Beijing has leveraged its diplomatic relations and historical ties with African states in securing mineral deals for its companies.

VP Kamala Harris’ recent trip to Africa evidences the US’ attempts to replicate a supply chain similar to that of Beijing, i.e. one that is secure and composed of friendly states (see the White House fact sheet on the establishment of a lithium battery assembly plant on the continent). Despite its latest attempts, the US still has a long way to go. In so far as lithium is concerned, some analysts believe the ultimate answer to securing more lithium for the West will not be digging more of it out of African rock, but rather by developing substitutes such as sodium-ion batteries in laboratories.

By far the most important of these rare earths is cobalt — the silver-grey metal (symbol Co atomic number 27). It is essential for lithium-ion batteries. The DRC produces somewhere between 70-75% of the stuff of which 90% of it is mined by two industrial firms, Glencore, an Anglo-Swiss trader, and China Molybdenum, a Chinese state enterprise.

Despite the country’s resources, the DRC’s weak state, limited authority, and absent institutions have made these resources a curse instead of a blessing. Mines are either run or protected by the state’s army, local warlords, or a mishmash of opportunistic artisanal miners. Battles between these forces are frequent and the Congo has lost some ~11million people between 2000-2019. If one is to visit these mines today, it would not be uncommon to see children working in the most horrific conditions (watch Blood in the Mobile or This is Congo). Apple and Tesla are being sued in America for using cobalt illegally mined on Glencore’s property by children who died (Glencore is not a defendant). For more on the unfolding human tragedy in the DRC, consider the haunting Cobalt Red: How the Blood of the Congo Powers Our Lives.

With the electrification of transportation and the move to clean energy, the demand for rare earths will only increase.

In this face of this demand, governments face two sources of intense time pressure: uncomfortable dependence on China as tensions escalate with the West and the urgent need to limit climate change by deploying clean-energy technologies. All the while the human toll for the Congo and its neighbours mounts.

Good climate, economic, military, and industrial policy should not only concern itself with zero-sum geopolitical considerations or bottom line results. There must be some thought given to the immense humanitarian crises unfolding in the places that give us the essential elements for our ‘modern’ living. If the West is to build allies on the continent, secure its supply chains, and compete, it would do well to differentiate itself by incorporating some humanitarian consideration into its foreign economic policy. For its part, the African state must strengthen and consolidate democratic institutions. If the state fails to do so, it will not convert its resource abundance into prosperity. It will instead, fall into the trap of the resource curse.