Rare Earth Exchanges

Prospects and Challenges for Rare Earth Exports from Sub-Saharan Africa to the EU

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Highlights

  • Sub-Saharan Africa possesses significant rare earth element reserves critical for renewable energy and advanced technologies.
  • The EU seeks to diversify mineral supply chains by partnering with African nations, countering Chinese market dominance.
  • Success requires addressing geopolitical, environmental, and infrastructural challenges through collaborative and ethical strategies.

The global race for rare earth elements (REEs) is intensifying due to their critical role in renewable energy, advanced technology, and defense industries. Sub-Saharan Africa (SSA), endowed with substantial REE deposits, holds potential as a key supplier to meet the surging demand. However, exporting these resources to the European Union (EU) presents a complex mix of opportunities and challenges, including the already major presence of the People’s Republic of China on the continent.

Earlier this year, Dirk Kohnert, (opens in a new tab) an associate research fellow at GIGA German Institute of Global and Area Studies, authored this piece in SSRN.  What are the key opportunities the German scholar and researcher writes about?

Opportunities for EuropeSummary
Abundant Resources Partnerships between SSA and the EU could improve mining, processing, and transportation infrastructure, enhancing the region’s competitiveness in global markets.
Growing EU Demand The EU, heavily reliant on imports for its clean energy transition, seeks to diversify its supply chain. Collaborating with SSA offers the EU a chance to secure essential minerals while providing SSA with economic growth opportunities.
Potential Infrastructure Investments Partnerships between SSA and theEU could improve mining, processing, and transportation infrastructure, enhancing the region’s competitiveness in global markets.
Collaborative Research and Development Joint ventures between African and European research institutions could drive innovation in environmentally sustainable extraction and processing methods, creating mutual benefits.

Of course, working in Sub-Saharan Africa to extract and import REE involves major challenges as well.

ChallengesSummary
Geopolitical Instability Political uncertainty in countries like the DRC poses significant risks to supply chain security. Transparent governance and stable political structures are essential to build trust with EU partners.
Environmental and Social Concerns REE extraction is associated with severe environmental degradation, including water and soil contamination, and social issues, such as child labor and unsafe working conditions. Aligning with EU standards requires substantial investment in environmentally friendly and socially responsible mining practices.
Infrastructure Deficits Limited transportation and energy networks in SSA hinder efficient extraction and export. Collaborative infrastructure projects with EU funding and technology transfers could address this bottleneck.
Market Competition and Dependency China’s dominance in the REE market, accounting for 60% of production and 80% of processing, creates pricing uncertainties for SSA producers. Strategic alliances with the EU could mitigate these risks and establish fair trade mechanisms.

What about risks and assumptions?

  • Economic Volatility: The global REE market is susceptible to price fluctuations, creating uncertainty for SSA economies reliant on these exports.
  • Resource Curse: Without effective management, SSA could fall victim to the “resource curse,” where reliance on resource extraction undermines economic diversification and sustainability.
  • Dependence on External Players: SSA’s reliance on foreign investments and expertise for REE exploration and processing risks perpetuating dependency and limiting local value addition.

Rare Earth Exchanges reviewed the entry for possible biases. The focus on green energy transition and ethical sourcing by Western nations, including the EU, may conflict with the profit-driven motives of corporations and SSA governments, leading to selective adherence to environmental and social standards. Additionally, geopolitical interests, such as countering China’s influence, may overshadow genuine development goals for SSA.

Conclusion

Sub-Saharan Africa has the potential to become a vital supplier of rare earths to the EU, contributing to global efforts toward sustainability and energy transition. However, success hinges on addressing significant challenges, including governance, environmental sustainability, and infrastructural limitations. Collaborative strategies that prioritize transparency, ethical sourcing, and capacity building can transform SSA into a reliable and responsible player in the global REE market, fostering growth and mutual benefits for both regions.

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