‘Africa can and must negotiate from a place of strength on critical minerals’

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JIMMY MOYAHA: The role of critical minerals is becoming increasingly important in global conversations, so much so that at the most recent G7 gathering that took place towards the middle part of last month in Paris, the G7 nations committed to a $64 billion push towards critical minerals.

We’re going to be exploring this in a bit more detail with the senior research fellow at the Trade Collective, Dr Lebohang Pheko. She joins me on the line now to see if we can make sense of this. Dr Pheko, lovely having you on the show. Thanks so much for taking the time.

The conversation around critical minerals has evolved, and evolved at quite a rapid rate over the last couple of years, particularly post the Covid-19 pandemic, and since the increased interest from superpowers like the United States and China.

In all of this, Africa seems to be relatively quiet, considering a lot of these critical minerals are found on our continent.

DR LEBOHANG PHEKO: Well, indeed. I think there are a few things that should be borne in mind, which are really that we are one of the key regions for these minerals.

And we’ve become important because of, firstly, the Energy Transition – which is countries moving away from fossil fuels.

Secondly, it is because of electrical vehicles, which contain several times more mineral inputs than conventional petrol vehicles.

And thirdly because of wind turbines. These also require increasing amounts of rare-earth elements in order to propel themselves.

So we have to think about things like solar panels, which require copper and silicon and silver. We also have to think around things like electricity grids which require huge quantities of copper, for example.

But the other part of this, which we don’t really pay much attention to as the African continent, is that artificial intelligence is often discussed as ‘a software’. But in reality AI is actually mineral-intensive.

For every data centre there’s a requirement for copper wiring, there’s a requirement for aluminium, there’s a requirement for nickel, rare-earth magnets and so forth.

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And the other part of this, Jimmy and the listeners, is that there’s geopolitical rivalry that is also part of this – critical minerals that have become a key strategic asset, just like oil was throughout the 20th Century.

We know about China. We know about their domination of much of the world’s refining and processing capacity, and that the US is a bit on the back foot. The European Union, Japan and, as you rightly said, G7 countries are also trying to diversify.

But to your point, where the African continent is in the context of this is that we do export rocks, but other countries are exporting technology.

We export lithium concentrate, and then China refines it. Then in South Korea, they manufacture battery cells.

Germany then builds electric vehicles. The US then develops battery software, for example. So these profits are then made elsewhere.

And I think in all of this we are very clear that colonial patterns are repeating themselves – that we’ve always been the suppliers of raw materials.

But the good news here is that we do have much more leverage, Jimmy, and we can insist on local processing, we can insist on battery manufacturing, we can insist on regional industrial clusters, we can insist on technology transfer, we can insist on African ownership.

We can also insist on research and development, skills development, infrastructure investments, in return for our critical minerals.

I think what we should avoid is just continuing in the status quo – generous tax holidays, weak royalty regimes, environmental destruction without adequate safeguards, labour exploitation, isolated enclave mining economies and so forth.

I think that also brings us to possibly your next question, which is around the ACFTA, the African Continental Free Trade Area.

JIMMY MOYAHA: It certainly is, Dr Pheko. But before we get to that question, I want to go into the beneficiation conversation that you’re alluding to here because even at this year’s G7 gathering, there was a very clear absence of the African voice in these conversations.

Yes, Kenya was there as an invited guest by France, and we know that that was following South Africa being uninvited to this particular gathering. [Dr Pheko chuckles]

I want to get into that geopolitical push-and-pull and the jostling for the critical minerals – but also the importance then that Africa has to put forward its foot and say, ‘We will not allow the colonial mistakes of the past’ – as you mentioned – ‘to repeat themselves’.

DR LEBOHANG PHEKO: This is where political economics really enters the foray – and we don’t ask the important questions.

The G7 discussions were really about securing supply chains and reducing dependence on the ‘Look East’ policy that many of us have been adopting, and guaranteeing access to these critical minerals.

But what’s really striking is that the countries that possess many of these minerals – and, as you rightly say, Jimmy, primarily African countries – are largely absent from the table where the terms of engagement in this new green economy ostensibly are being negotiated.

The G7 isn’t simply discussing trade, it’s actually discussing where processing and refining will take place, who is going to own future battery and clean technology industries, and the financing arrangements.

I think it’s difficult to build around an equitable discussion when the owners of these critical minerals aren’t fully represented in designing it, for a start.

The question is also around, as you rightly say, the geopolitical jostling.

In many respects we find ourselves really a geopolitical football – or geopolitical diamond, really – such as we are in the contestation between the diminishing but very belligerent interests of the United States at the moment, [and] the stridency of China.

We also have underestimated to a great extent that Japan is not entirely a spent force there – a quiet force, a quieter force than they were. By the way, they are currently still the third-largest economy, I think the third- or fourth-largest economy in the world. So they’re not a spent force by any stretch of the imagination.

You also have other interests, like Turkey, for example, which are trying to play this interesting role between West Asia, Europe and the West, a sometimes problematic role such as it is.

You have India, which also is not a spent force, also arising, emerging at some stage at the same pace as China. They have imploded in some different ways, but still are a significant market and, by the way, also a significant generator of minerals themselves.

So a lot of this is to do with people’s geopolitical interests, geo-military interests by the way, amid all of this.

And I think it’s not so much why beneficiation is so difficult. It’s industrial finance and specialised technical skills and stable industrial policy – these things are really important.

But it does also go to the fact that African countries need to negotiate differently.

We need to ask questions around how processing occurs locally. Despite these geopolitical shifts, what is the kind of technology which will be transferred, and between whom?

And what are the licensing arrangements that are going to be made around this transfer of technology, for example, because we know that licensing also grants us the ability to continue to exploit – capitalise is a better word – on our products and on our creativity almost in perpetuity.

How many engineers and technicians are going to be trained and where will they be trained? And so on and so forth.

So it’s much deeper than us being caught up in these strange and often strenuous politics. Yet we are in the middle of them, and yet we are peripheralised in these discussions.

JIMMY MOYAHA: Dr Pheko, before I let you go, I want to look at the leverage aspect that you touched on, and get your thoughts on the positioning of Africa.

The Africa Continental Free Trade Area is still the largest trade area agreement by number of participating countries that exist in the world today. How do we leverage an instrument as powerful as that agreement to ensure that the voice of the continent is heard and taken seriously beyond just being considered part of the conversation?

DR LEBOHANG PHEKO: We’ve been talking for a long time as a continent around bargaining as a bloc, not just as individual countries – and all of these laudable and rhetorically exciting ideas around Pan-Africanism – which really we haven’t had the political will or the stamina to see through to date.

Mining companies and major powers have historically negotiated with African countries individually, and we’ve allowed that.

This has created basically a race to the bottom where countries compete by offering lower taxes, weaker labour standards, fewer local-content requirements and so forth.

So what the ACFTA does is to create a possibility of coordinated positions on mineral royalties, for example, local beneficiation requirements, environmental standards, investment rules, [and the] technology transfers I’ve been talking about.

And I think if one country nation negotiates, it negotiates from weakness. But 54 countries negotiating through a common platform can then begin to negotiate from a position of strength.

JIMMY MOYAHA: Negotiating from a position of strength and prioritising our own needs as a continent – not very different from what the rest of the world has been doing up to this point. We’ll see how these conversations shape up and where it is that they lead us.

For now we’ll leave this conversation on that note. Senior research fellow at the Trade Collective, Dr Lebohang Pheko, joined us to take a look at critical minerals and how the conversation is evolving locally and internationally.