Ambassador J. Peter Pham was the first-ever US Special Envoy for the Sahel Region. Previously he served as US Special Envoy for the Great Lakes Region of Africa. He is non-executive Chairman of High-Power Exploration (HPX), a privately-held US company focused on the development of the ultra-high-grade Nimba iron ore project in Guinea.
The condition sine qua non for the successful pursuit by the United States and other Western countries of their aspirations for net-zero emissions by mid-century and other advanced technological innovations is access to a robust and secure supply chain of critical minerals and metals. With its prodigious reserves of these strategic materials—inter alia, the Democratic Republic of the Congo (DRC) alone accounts for 70 percent of global production of cobalt (key to batteries and renewable energy applications), while Guinea produces over half of world’s bauxite (the primary source of aluminum)—it has long been acknowledged that “Africa is going to play a huge role,” as U.S. Deputy Treasury Secretary Wally Adeyemo recently remarked. Less widely recognized has been the increasingly influential role that Middle East countries, especially the Gulf Arab monarchies of Saudi Arabia, the United Arab Emirates (UAE), and Qatar, are rapidly assuming in supply chains for these strategic minerals.
Comparative Advantages
Historically, relations between Arabia and Africa go back centuries and involve a complex network of overlapping social, cultural, religious, economic, and political links. Who can forget the hajj undertaken by Mali’s Mansa Musa in the early fourteenth century that included an entourage reported to number some 60,000 men and so much gold that global prices for the metal did not recover for over a decade?
More recently, however, the UAE become over the last decade the continent’s fourth-largest foreign direct investor, behind only China, the European Union, and the United States. Last year, the Emiratis signed a $1.9 billion deal with the DRC to develop at least four industrial mines in the latter’s provinces of South Kivu and Maniema, both rich in gold, tin, and tantalum. Not to be left out, Saudi Arabia established the Manara Minerals Investment Company, a new joint venture of state-owned Saudi Arabian Mining (Ma’aden) and the Public Investment Fund (PIF) sovereign wealth giant, with an initial $15 billion to invest in mining assets abroad “to support the development of resilient global supply chains.” While Qatar’s sovereign wealth fund, the Qatar Investment Authority (QIA), has traditionally focused on long-term investments with established multinational companies, more recently it has expanded its reach in Africa with both mining operations by the wholly state-owned Qatar Mining Company, like its advanced copper-and-gold porphyry project in Sudan.
The interest in mining is a natural follow-on to these countries’ ambitions to diversify their economies away from fossil fuels—petroleum and natural gas—which made them wealthy in the twentieth century and continue to fill their treasuries today. While some of them have largely untapped mineral resources of their own—Saudi Arabia’s Ma’aden, for example, bought a 9.9 percent stake in U.S. mineral exploration company Ivanhoe Electric in 2023 in order to gain access to its proprietary “Typhoon” surveying technology and, subsequently, formed a joint venture with the American firm to embark on a multi-year exploration campaign of the kingdom—they still needs to secure supplies of other metals in order to anchor the industries like EV makers and battery manufacturers.
The comparative advantage of the Gulf Arab investors when getting into African mineral development goes well beyond their access to immense amounts of capital, but also their experience in two closely related sectors which have hitherto proven obstacles to African countries’ developing value chains from their natural resources: energy and logistics.
The UAE state-owned Abu Dhabi Future Energy Company (Masdar), has developed renewable power projects in Africa since 2013 and currently has operations in Mauritania, Morocco, Senegal, Seychelles, and South Africa. At the end of 2023, it announced plans to invest $10 billion to produce 10 gigawatts of clean energy by 2030 in Angola, the Republic of Congo (Brazzaville), Kenya, Mozambique, Uganda, and Zambia. Meanwhile, the QIA announced just last month a joint venture with Italy’s Enel Green Power S.p.A. to build a 330-megawatt renewable power generation project in South Africa to supply the energy-starved extractive industry in Africa’s second-largest economy with energy from massive wind turbines.
DP World, based in Dubai, operates ports or logistics centers in nine African countries—Algeria, Angola, Djibouti, Egypt, Mozambique, Nigeria, Rwanda, Senegal, and South Africa—plus unrecognized but de facto independent Somaliland, while the AD Ports Group, based in Abu Dhabi, signed a partnership with the Africa Finance Corporation at the end of 2022 to expand beyond its existing African operations in Egypt. Last year AD Ports received a 30-year concession to manage the port of Pointe Noire in the Republic of Congo and, just last month, in a joint venture with an Indian group, acquired the container terminal at Tanzania’s main port of Dar es Salaam. The former deal includes a commitment to invest $220 over the next two years to modernize the Congolese port.
Meanwhile, Qatar has gone “all in” on Rwanda’s air transport sector. In 2021, Qatar Airways signed a codeshare agreement with the Central African country’s flag carrier, RwandAir, launching a thrice-weekly service between Kigali and Doha. The two airlines subsequently began jointly operating a cargo hub at Kigali International Airport, which has expanded to include air freighter service connecting not just the Rwandan and Qatari capitals, but also connections to Kenya and Uganda as well as Belgium, France, and Norway. In 2023, Qatar Airways advanced plans to buy a 49 percent stake in RwandAir. Meanwhile the QIA is financing and taking a 60 percent ownership in a new Kigali airport, slated to be completed in 2026, that will be able to accommodate 8 million passengers annually.
African Perspectives
The case that South African mining economist Gracelin Baskaran, now a research director at the Center for Strategic and International Studies, has argued for Saudi Arabia—that it “is an attractive partner for African countries” because of its “development story of leveraging the extractive sector for equitable economic growth” and that it “is not sensitive to short-term price signals”—can also, broadly speaking, be extended to its Gulf neighbors.
Moreover, the investment inflows into Africa come at a time when China, hitherto Africa’s “go-to” source for capital, faces a “perfect storm” of headwinds of its own with its lackluster economic recovery as it emerged from the COVID-19 pandemic and its strict “zero-covid” restrictions, the apparent meltdown of the Chinese real estate market with the collapse of Evergrande and other giant developers, and the demographic issues highlighted with India surpassing China as the world’s most populous country in 2023 as well as the increasingly aging (and shrinking) Chinese population. As The Economist noted recently, “in the 2020s annual new Chinese loans to Africa is on the average 10 percent of what it was during the 2010s ($1.4 billion per year versus $14 billion)…[while] the share of Western aid to Africa was at its lowest since at least 2000.” Against this backdrop, the Gulf Arab countries’ wealth combined with their ability to make quick decisions and capacity to move countercyclically are appreciated by African governments and businesses.
Also, coming at a time when African countries have sought ways to capture more of the value chains for their mineral wealth as the global energy transition placed on premium on the strategic materiel, the path which Africans perceive the Gulf Arab states as having successfully tread—leveraging domestic natural resources to achieve development—is one that resonates with African populations eager to see their own economies lifted. In addition, unlike Chinese mining companies who have been widely criticized by African governments and civil society organizations for their importation of labor and other practices, the Gulf Arab investors tend to be more interested in securing stakes in enterprises, rather than buying them outright and operating them, this leaving Africans to capture a potentially larger proportion of the revenues.
America’s Challenge
All this is happening against the increasing awareness in the United States as well as among its European and other allies that they face a double challenge in achieving their domestic and international commitments with respect to transitioning to a less carbon-intensive, if not net-zero emission, world.
First, overlooked in many discussions of the energy transition are the wildly different material requirements of renewable energy systems vis-à-vis their conventional fossil fuel-powered predecessors. For example, an EV like the Tesla Model Y, the top-selling car in the category in America in 2023, needs six times the amount of minerals that would go into a conventional automobile. Its wiring alone requires about 130 pounds of copper, equivalent to three times the amount of the metal that goes into a gas-powered car. Copper, an efficient electrical conductor, is also necessary for the switch to solar- and wind-powered generation for homes and businesses, which will also necessitate massive rewiring of national infrastructure. If, as expected, demand doubles to about 50 million metric tons a year by 2035, there will be an annual shortfall of nearly 10 million metric tons under the most optimistic scenario. And that is just copper: according to the International Energy Agency, achieving the goal of net-zero emissions by mid-century enshrined in the EU Climate Law as well as in President Biden’s December 2021 executive order will cause the cumulative demand for the most common minerals used in EVs and battery storage—lithium, graphite, cobalt, and nickel—to grow thirty-fold over the next two decades.
Second, compounding the shortage of material inputs is the concentration of sourcing and processing of the available critical minerals. For example, as noted earlier, by itself the DRC accounts for 70 percent of global cobalt production. Furthermore, virtually all of the cobalt recovered is then exported for processing to China, which also refines about 90 percent of the rare earth elements (REEs), two-thirds of the lithium, and almost 40 percent of the nickel in the world. As Deputy Assistant to the President Amos Hochstein acknowledged at last year’s African Mining Indaba, the premier annual gathering of the industry on the continent, “This is a major concern for the U.S. and I think for the rest of the world. As we are going into a cleaner, greener, an entirely new energy system, we have to make sure we have a diversified supply chain… We can’t have a supply chain that is concentrated in any country, doesn’t matter which country that is.”
While boosting domestic production is one conceivable way out of this quandary, both the Biden administration’s restrictive approach to permitting as well as geology mean that there are limits to what can be achieved. As I pointed out two years ago, possesses less than 1 percent of the world’s reserves of cobalt and, even if it could possibly to mine it all, would still run through its entire supply in about six years at the current rate of consumption.
Thus, the United States must cultivate new partnerships. The memorandum of understanding signed at the U.S.-Africa Leaders Summit at the end of 2022, committing the United States to working with the DRC and Zambia to strengthen the EV value chain has good potential, especially since it was followed up with strong U.S. and, subsequently, European investment in the Lobito Corridor connecting Angola, the DRC, and Zambia with not just a shorter and more reliable transportation route from the mineral-rich interior countries to the eponymous Angolan port on the Atlantic via a refurbished and expanded railway, but also spurring buildout of telecom and energy infrastructure.
Not only are there opportunities to investment by the Gulf Arabs in the Lobito and other planned strategic corridors, but U.S. officials have also begun seriously engaging their Gulf Arab counterparts in direct talks about securing critical minerals and other strategic metals in Africa that Americans and Arabs need for their respective energy transition and future technology ambitions. In early January, at the Future Minerals Forum in Riyadh, the Export-Import (Exim) Bank of the United States signed a memorandum with its Saudi counterpart to collaborate on a variety of projects, including climate and energy security as well as critical minerals development. According to several sources, also being discussed—not only with the Saudis, but also the Emiratis and the Qataris—is U.S. support for their sovereign wealth funds or other enterprises buying stakes in strategic mining assets in several African countries, including the Democratic Republic of the Congo, Guinea, and Namibia. The objective would be to not only progress the Gulf Arab states’ plans to diversify their economies by processing and trading critical minerals as well as building up high-tech industries, but also ensure American industry access to global supply chains not dominated by China.
A New “Super Region”
The geography of the Middle East, straddling the trade routes between Europe and South and East Asia, has long made it the world’s entrepôt. As the Gulf Arab countries move to diversify their economies from the production of fossil fuels, some, like Saudi Arabia, are exploring the other potential natural resources below, while others, like Qatar and the UAE, are looking to leverage wealth, favorable institutions, and infrastructure, including abundant energy, to their best advantage in the race to secure access to critical minerals and capture value chains. The result is the emergence of a “super region” encompassing Africa and the Middle East with a dynamic combination of rich natural endowments of both minerals and energy resources as well as burgeoning processing capacity can play a significant role both in assuring resilient supplies and sustainable value addition.
The successful pursuit of these objectives could well prove to be a “triple win” for African countries seeking greater benefit from their mineral and metal resources, for the Gulf Arab states seeking to diversify their economies as well as elevate their geopolitical and geo-economic heft, and for the United States as it seeks reliable access to the strategic materiel with which tomorrow’s world is being forged today.
