In Gracelin Baskaran’s recent publication on Brooking Africa Growth Initiative, titled “Could Africa replace China as the world’s source of rare earth elements?” Baskaran explores the untapped potential of African rare earth minerals and the ways in which African countries can reap the greatest benefits of rare earths for their markets, allowing Africa to be in a strategically advantageous position to join significant international value chains and to use the ensuing proceeds to enable just economic development.
In her article, Baskaran highlights that rare earth elements, vital for both human and national security, are predicted to expand from a global demand of 125 000 metric tons in 2021, to 315 000 metric tons in 2030. The predicted expansion of the rare earth elements market is significant, and even more so considering its expansive utility. Rare earth elements are utilised in the production of renewable energy technology, electronics, and national defence equipment.
While China has held the position of primary rare earths producer for a number of years, recent geopolitical tensions have surfaced between China and Taiwan, and various major rare earth element suppliers – including previously dominant players such as the US – which has opened up the door to new rare earth elements competitors.
Baskaran argues that “[this] opens up a window of opportunity for African countries” that are rich in crucial rare earth commodities. Despite the exploration budgets of sub-Sahara African countries being remarkably low in comparison to their international rivals, their potential has certainly not gone unnoticed. An increasing number of formidable international players, including Canadian exploration firm Mkango Resources, Australian firm Bannerman Energy, and British firm Pensana Rare Earths, have invested heavily in African mining operations over the past three years.
Notwithstanding the uptake in international investment, explorations and production, Baskaran notes three ways in which African countries could maximize their opportunity to expand in the regional and global rare earth elements markets. In short, she notes that “[governments should] strengthen tax policy to maximize revenue collection while keeping stable fiscal policy to prevent volatilities that can deter investments”, “African countries should leverage the African Continental Free Trade Area to maximize value addition” and that “Africa should use resources strategically to build strong trade partnerships and strengthen its presence in global value chains, particularly with the US, EU and Australia.”
Click here to read Baskaran’s full article.