As developed world economies push for ever more digitization, technological innovation and energy sustainability, there is one commodity for which demand has grown exponentially: rare earth metals (REMs). These raw materials are an essential ingredient for the production of high-tech, low-carbon products that are necessary for the growth that the US, UK and EU countries in particular are pursuing. But with the largest REM producer and refiner, China , has seen rising tensions and competition with its Western buyers in recent years, the global technology supply chain looks alarmingly precarious. The answer, according to US and European leaders, appears to be a pivot to the global south and Africa’s emerging rare-earth metals market.
However, China too is racing to grow its already impressive tech sector and has set its sights beyond domestic procurement. This race for African resources is not only about the distribution of these materials among high-tech nations, but also about the sustainable economic development of African nations. Western governments have announced their intentions to gain access to these materials and thereby reduce their dependence on China for technological services and products. However, looking back at the effects of both Western and Chinese involvement in African trade, it is clear that these deals were far from fair. It is therefore important that future trade in African REMs does not burden African economies and local populations.
Global technology supply chains have become heavily dependent in recent decades on China, which became the world’s number one exporter of high-tech goods in the 2000s, according to research by the Asian Development Bank. In 2019, of total US consumer electronics imports, 70% were of Chinese origin, according to the Boston Consulting Group, with the total value of Chinese high-tech exports reaching USD 716.6 billion. But that trade relationship has become less attractive in recent years due to a number of factors, including increased Chinese surveillance of Western companies operating in the county and allegations that Chinese technology, most notoriously Huawei, has been used for espionage.
Outside the technological sphere, it is also important to consider that China maintains an aggressive stance towards its neighbor Taiwan and refuses to accept its independence, which is supported by most Western countries. Western governments have responded to these developments by passing legislation (Chips Act – UK and US) aimed at limiting trade with China and avoiding these risks and, consequently, developing domestic know-how and capabilities – and the two would reduce reliance on China, should already be tense politics and trade relations are deteriorating.
What cannot be sourced domestically, however, are the raw materials that have made China a technological powerhouse in the twenty-first century. Africa, with REM resources of dysprosium and terbium in Namibia and apatite and syncysite in Malawi, to name but a few, offers trading elements with a significant range of industrial and military uses, including lasers, magnets and energy-saving technologies. But as both China and the West rush to secure trade deals with the managers of Africa’s new gold mines, it is important for leaders to consider the long-term implications of this trade for their new partners, not just the profits that may accrue. their domestic economies.
Past mistakes by both China and the West regarding trade relations with the global south have had dire consequences, notably in the Sahel region where French uranium processing companies operating in Niger have been accused of striking deals that disproportionately benefited the former colony. Local populations benefited little from this lucrative state export, which contributed to anti-French sentiment and calls for a severance of Franco-Nigerian trade relations. Likewise, although China has sought to position itself as a more legitimate trading partner since it did not share in the legacy of Western slavery and colonization on the continent, The expansion of Chinese trade relations in Africa is not without its flaws. For example, the Chinese-funded SORAZ oil refinery in Niger has been criticized for under-employing Nigerians and the dramatic wage gap between Chinese employees and local ones. In an increasingly globalized world, it is imperative that supply chains are made sustainable through fair and transparent agreements that mutually support the economies, societies and security of all nations involved.
However, the concept of fair and sustainable trade policy is easier said than done. Establishing equal pay for both local and foreign projects or guaranteeing exporting economies a fair price for their resources would be an obvious start, but there are additional initiatives that could be implemented to ensure sustainable long-term REM trade with the Africa. Obviously, handing over operational control of profitable industrial projects to local officials with insufficient expertise, or funneling profits directly into the coffers of governments with records of corruption and financial mismanagement, is unlikely to be the most effective way to ensure that an industry remains efficient and that the locals benefit from the income it generates.
Likewise, it would not benefit the importing state in the long run if its trading partner is inefficient in the production of goods and politically or economically unstable due to its trading partner’s unethical profit management. REMs are essential for the provision of technological, financial, transport and health services, intermittent supplies must be avoided at all costs. So for both parties to benefit, trade with Africa in REM should lend itself to a bottom-up process of economic empowerment of local populations. While it is demeaning to dictate to African governments where the money they earn from their own resources should be spent, it is important that trading partners consider the role they play in encouraging positive structural change. Studies by the School of Education at the University of Cambridge found a correlation between secondary education rates and GDP. Education is a tool that not only enables the individual to obtain better paying roles, but also contributes on a national scale to stimulating the economy. While Namibia has a relatively high literacy rate (92% according to the latest World Bank record in 2021), other African suppliers of rare earth metals such as Malawi and Angola lag far behind.
Health and social care are additional ethical issues to be considered when working with a trading partner, and again some African economies are lagging behind in their provisions. While the WHO states that developed economies have a 91% rate of universal health care (UHC) provision, some African countries showed much lower rates, 48% in Malawi and 37% in Angola. Access to health care, like education, which has a positive relationship with economic productivity according to the National Institutes of Health, is again mutually beneficial for importing nations to prioritize the local needs of their exporting partners. However, to ensure that essential services benefit the many and not just the few, it is sometimes not possible to fully rely on exporting governments to make adequate provision. Considering that the transparency scores in Malawi and Angola do not exceed 34/100, it is possible that not all the funding intended for these services has been received. Governments involved in this booming African industry must consider the most effective way to reach out to local populations, both for ethical reasons and to ensure the success of their commercial relationships.
Grassroots movements and NGOs are prime targets for funding as they are often able to provide services directly to those in need. A huge number of non-governmental initiatives, such as World Vision International in Angola and the Parent and Child Health Initiative in Malawi, are improving education, health care and a range of other basic services in REM-producing African nations. But these organizations cannot function without funding. To improve the sustainability of mutual trade, it is therefore important that importing economies now rushing to secure REM trade agreements with African countries do not overlook the benefits of strengthening the economies and people of their trading partners. It is not only in the interest of the welfare of the African nation, but also of the importing nation. As seen in Niger, unethical relationships lead to unstable supply chains, which can cause commercial failure on a massive scale.