Following the launch of a new report by Brookings’ Africa Growth Initiative, host Landry Signé sits down with AGI scholars Ede Ijjasz-Vásquez and Vera Songwe to discuss how U.S. investments in mining can transform African economies while diversifying American access to much needed critical minerals.
[music]
SIGNÉ: Hello, I am Landry Signé, senior fellow in the Global Economy and Development Program and the Africa Growth Initiative at the Brookings Institution. Welcome to the Foresight Africa podcast, where I engage with distinguished leaders in policy, business, academia, and civil society to share their unique insights and innovative solutions to Africa’s challenges, while the highlighting opportunities to advance engagement between Africa, the U.S., and the global community.
You can learn more about this show and our work at Brookings dot edu slash Foresight Africa podcast. My guests today are Vera Songwe and Ede Vásquez. Vera Songwe is a nonresident senior fellow in the Africa Growth Initiative and the Global Economy and Development Program at the Brookings and Institution. She’s also the founder and chair of the Board of the Liquidity and Sustainability Facility and co-chair of the Food System Economics Commission and was previously an undersecretary-general and executive secretary of the United Nations Economic Commission for Africa, among others.
Ede Vásquez is also a nonresident senior fellow here at the Brookings Institution Africa Growth Initiative, as well as advisor to several international organizations. He worked at the World Bank for more than two decades and when there responsible for the mining portfolio of Latin America and the Caribbean, as well as China, and for implementing social safeguards policies globally, including in mining operations.
Welcome to the show, Dr. Songwe.
SONGWE: Thank you for having me. It’s glad to be here.
SIGNÉ: Amazing. And welcome to the show, Dr. Ede Vasquez.
IJJASZ-VÁSQUEZ: Thank you so much, Landry.
SIGNÉ: You both participated in AGI’s event entitled, “Leveraging U.S.-Africa Critical Minerals Opportunities: Strategies for Success,” which also mark the launch of our co-authored high-impact policy report on critical mineral supply chains and investment opportunity in Africa and the U.S.
Critical minerals have become an increasingly important topic in policy and business circles. Vera, for those who may be unfamiliar, can you briefly explain what critical minerals are and why the topic has taken so much importance?
[3:23]
SONGWE: Yes. Again, thanks to be here. Critical minerals are essentially minerals that are used for essential economic activity and for security. I’d use the sort of U.S. definition because I think that’s what everybody uses, the 2020 U.S. Energy Act.
It has three components. First, as I just said. It’s essential for economic activity and for security. Secondly, there are vulnerable minerals or can expose countries to vulnerability, which essentially means that their availability is an important criteria backup for security and economic development and growth. And finally, they are essential for building supply chains and making sure that economies are stable.
And I think that what we see, and the reason why we are talking a lot about them is there are 50 of them that are called critical minerals across the world. The United States in particular essentially depends on the rest of the world for about 40 of those critical minerals. Entirely depends on the rest of the world for 12 of them. And for the other 28, imports at least more than 50%.
And so these minerals are essential for everything that you do, everything that you touch. They’re essential for your phone, for your car, they’re essential for U.S. security, propellers. But they also particularly I think, have become quite important for climate change, because you cannot produce windmills or electric vehicles if you do not have critical minerals. And so even as we strive to change, you know, the living planet, critical minerals are a fundamental anchor for that transition into where we would like to go.
But they are also worth $500 billion by 2040, so
SIGNÉ: oh, wow!
SONGWE: huge generator of income we’ve seen in the last few months. Elon Musk, the richest man in the world, his business is electric vehicles. Electric vehicles are essentially made out of critical minerals. Right? And so that is one of the reasons why we want to talk and why they’re important and what they are.
For people that are listening, maybe to be more precise, and some of them I had to go look up as we were writing in the paper, is yttrite, a critical mineral. In Africa, we are not familiar with that, but we are familiar with platinum, of course, manganese, which comes from Gabon, but platinum from South Africa, zirconium from South Africa. Aluminium of course, that also is is part of the critical minerals family. Tantalum, that’s part of the critical minerals family. And who can talk about critical minerals without talking about cobalt and and sort of the African giants of the critical minerals family. So, so there’s this long list, lithium, bauxite, that are all critical minerals. And essentially 35 African countries have one, at least one critical mineral. Again, why this is an important conversation for us.
SIGNÉ: Fantastic. Thank you so much, Vera. I really like the comprehensive approach in providing specific insights on critical minerals and why they are so important for the world and also for Africa.
Let’s turn now to our policy report, which draws on cutting edge research and expert insights. There has been much discussion and analysis on this very topic, both in Washington, D.C., and beyond. Ede, for those who follow developments in critical minerals, what fresh insights or distinctive findings does the report bring to the conversation? And what should policymakers, investors, and stakeholders take away from it?
[7:11]
IJJASZ-VÁSQUEZ: Thank you, Landry. And we will talk in more detail about many of these points but let me highlight three to begin with. First, when we were writing this policy report, one important change that had happened was in the U.S. the new Trump administration. So it’s a new approach to international trade, to international relations, international investments.
And therefore the paper was as designed to try to answer the question, how can an African country in this new environment position itself to take advantage of the critical minerals they have, the tremendous need that they have for development and jobs, and navigate this new landscape? So that’s one angle.
Second, we took a perspective that is not only about mining. Because a lot of the research happened, okay, how do you open the mine? How do you move quickly? How do you get permits? How do you do that? But it turns out that in order to really leverage that tremendous opportunity that critical minerals offer to Africa, it is important to think of not only the mine and the few square miles that it takes, but actually how do you actually provide reliable energy to the mine? Because mining operations suck energy like nothing. It’s one of the most energy intensive industries.
Second, how do you actually get the minerals out in a way that is cost effective and maintains really the competitiveness of those minerals? But also how do you leverage the fact that you are building energy and transportation and logistics infrastructure to develop those corridors to be able to create and expand export-generating industries and jobs that are fundamental for Africa. So that comprehensive view is a little bit different from what others have done that focus, correctly so, on the mining side.
And then third, it tries to unpack, Vera was talking about look, people talk about critical minerals, but there’s such a wide variety from cobalt to rare earths, which rare earths are actually not rare, but actually how, where to expand is really rare. And therefore trying to unpack. And trying to have that balance between a pressure for more bilateral negotiations and also the need to take a regional perspective, both from infrastructure side — if you are moving up the value chain on critical minerals, how do you need the regional corporation to make it happen?
So those are three areas that we try to do a little bit different from other work that have been done before.
SIGNÉ: Powerful, Ede, and I know we’ll do a deep dive during this conversation. So which leads me to the next point that I wanted you to expand on. What are the main benefits to Africa and the U.S. of a strong critical minerals partnership, especially given the global challenges to U.S. supplies posed by other major producers? Vera perhaps first?
[10:09]
SONGWE: There are three big benefits. One, as I said before, the U.S. depends for imports for over 40 of the 50 rare minerals or critical minerals that we’re talking about. And so Africa has significant reserves, so by definition we have the supply that they need. And in this growing world of geopolitics, they cannot depend solely on one or two suppliers for their critical minerals, they need to do more. And so with the reserves that Africa has, there clearly is an incentive for them to come into the continent and see if they can work with us.
We know also that, yes, the United States, the new president has just passed an executive order saying that, you know, America should go out and open new mines. But it takes 16 years to be able to sort of open and fully start running a new mine. So in the interim, Africa has a lot of existing mines that have already begun, but do not have the investment and the infrastructure to be able to expand them. So not only do we have the reserves, but we already have mines in action.
And so essentially one of the big sort of activities that we see today in the mining world is mergers and acquisitions, right? People are just going and finding mines that are being under operation and buying them. And so essentially we have that on the continent. A lot of open pits that the United States, in particular, but many others were looking for ways of expanding their supply can do.
I think post-COVID we all heard about diversifying your supply chain. So coming to Africa is an important one. Today, for example, you know, the United States only takes out of Africa four critical minerals from two countries. I just said we have 35 countries that have what they need, right? They take three minerals from South Africa and one from Gabon. And so essentially there is almost a sort of a whole dining table ready for them to come. They don’t even go to DRC, right? So let’s, let’s start with that. So Gabon is manganese. Even in South Africa where they’re already present, right, they don’t take the lithium, they don’t take the lithium from Zimbabwe. So there is a lot more that the United States could benefit from.
[12:23]
So I said first is we have significant reserve. Secondly, is we have open mines so they can actually come and start production immediately. And finally, it’s not just about the mines. As Ede said, there is a whole sort of private sector environment. They’re looking for new investments. Ede talked about energy. You know, in many of the African countries, 40%, 30% of the energy consumed is consumed by the mines. They are the sort of anchor investors in the power sector, which allows then for diversification of our energy grids and for production of energy that can be distributed to lower and middle income consumers.
And already we have quite a a number of U.S. energy producers. I think we all remember General Electric all over from Nigeria to Cameroon to Kenya, are the ones sort of leading the show. The whole geothermal industry in Kenya is supported by U.S. business. But that also creates jobs, right? If we can create jobs in those horizons, that partnership is a win-win partnership for Africa and for the United States, because the United States gets the minerals is looking for Africa, creates the jobs that it needs. And so we essentially are not only lifting Africa’s growth, but we’re lifting and creating business and jobs for the United States.
SIGNÉ: Fabulous! A win-win partnership and where the U.S. can leverage the massive investment opportunities while you’re contributing to Africa’s economic development, including to job creation. Ede, what is your take on this?
[13:56]
IJJASZ-VÁSQUEZ: Let let me add a couple of points to what Vera explained really well. First, what we see in many mining operations and the additional infrastructure is that eventually the cities that are around create special economic zones, there’s more development and all that process. But it takes 20 to 30 years, which is a generation lost. A generation lost of opportunities. And therefore part of what we argue in the paper is to say, look, think of these, there’s a unique opportunity to not only look at the mining and the infrastructure and the jobs that are created for a few years, but actually develop all of that additional opportunities by leveraging the fact that you are solving one of the important challenges for Africa, which is energy and infrastructure and transport.
Second, for the U.S. what we also see is that in addition to the mines that are open, Africa has a opportunity to really open mines, we believe, faster, and we have a few recommendations than in other countries.
What you see in the media of the opportunities that the U.S. is looking at has a lot of complicated regulatory framework, has vested interest that make things a lot more slower. And therefore Africa, given the political commitment that it has and the push that the Africa Union has had, and the leaders of Africa have to really unblock many of these things to be far more efficient. To move from the 16 years, we believe that in eight years you should be able in Africa to start having operations. So there’s win-wins in many dimensions as we say.
SIGNÉ: I really love this. So, Ede, you are highlighting the agility on the continent, which allow probably to outperform other regions in terms of the operationalization of mines, which is also related to what you mentioned, Vera, the already existing investment, which could also be leveraged. Ede, we stay with you. Guided by the Africa Growth Initiatives’ goals to encourage policy dialogue and advance evidence-based practical solutions, what two to three key recommendations will you put forward to U.S. policymakers?
[16:13]
IJJASZ-VÁSQUEZ: Briefly, because there’s a lot more details in the report and we really encourage the audience to take a look at the report. There’s really interesting ideas that might be explored and that we look forward to continuing the dialogue around them.
SIGNÉ: Absolutely.
IJJASZ-VÁSQUEZ: But first, given the point that we’re making that actually there are more business opportunities than just in the mine, then a coordinated interagency approach is really needed. So it’s just not the mining, the U.S. Geological Survey that needs to focus on that, or a few things, but actually on energy, on infrastructure, the investment opportunities are really great. So don’t be too narrow, don’t look only on mining.
Second, we see many initiatives in the past in the U.S. that has been very dominated by the public sector, by the government, by diplomacy and the like. And we believe that this is only going to work if you have the private sector at the center. Because they’re the ones who know what are the governance issues, all of the bottlenecks, what is it that needs to be held resolved by the mineral diplomacy of the U.S. But at the same time, what are those specific areas of financial support that they need. Is it guarantees? Is it a little bit of support from the DFC? Is it blended finance that comes into the picture? They will tell you, and therefore the private sector needs to be at the center of this issue.
Third, just mining the critical minerals is not enough because most of the processing is now with China, and therefore you could try to diversify your mineral supplies. But if you don’t diversify your processing facilities, then you’re stuck in the same battle. And therefore being able to say, look, it makes economic sense, it’s more cost effective to do some of the processing in Africa and think in that direction from the beginning. It makes a world of difference in that process.
So a few ideas. There are many more in the report that I encourage our audience to take a look at.
SIGNÉ: Fantastic! So, adding values on the continent in Africa is also a key recommendation, which ultimately benefits the U.S. Relatedly, what policies or market approaches could help the U.S. secure reliable and timely access to Africa’s critical minerals?
[18:29]
IJJASZ-VÁSQUEZ: We believe that actually looking at very practical, bilateral investment agreements that focus on very practical, not pie the sky, but saying what are the practical investments that you need? And look from cradle to factory. What does that mean? Is from the extraction of the mineral, from the processing or pre-processing of the mineral, to the transportation, and to the export in that process. That comprehensive view — important.
Second, these agreements that are actually looking at ways in which there are multiple U.S. companies that are able to look at this comprehensive, strengthen the reliability in that process. It’s not just one off on the side, and there are many other actors involved. It’s really an opportunity to not only have more business options for the U.S., but it’s also to strengthen that relation.
And finally, look, in the end, it’s also mineral diplomacy. China has been doing mineral diplomacy with Africa for a long, long time, and there are many other new actors that are coming to the table. India, UAE, even the European Union are beginning to do that process. So it’s a competitive landscape, not only from the producers, not only from the mining countries, but also from the purchaser in the production.
SIGNÉ: Fantastic, Ede! Turning to Vera, what two to three recommendations will you put forward to African governments that want to create value addition as well as be better positioned in the negotiations with the U.S. for critical minerals?
[20:10]
SONGWE: I think three things. The first one will be what exactly can governments do? We know the governments do not have enough resources on the continent, and so we need additional resources. But governments have the will, the power, and the ability to influence policy. And essentially what we want them to do is put in place good policies. And and I think that maybe something that, you know, the IFC, the World Bank, or any development institutions, the African Development Bank, can do is start an “ease of doing business in the mining sector.” So that it begins to get the sense of where can we go tomorrow? What is the standard template of the first five or seven things that need to be done in every country if you want to attract mining investments? Is it a one stop shop?
We know that incentives don’t work. We know that businesses have already said that, you know, they would rather not have incentives but have good access to power. They would rather not have incentives but have better certainty on policy. They would rather not have incentives but have clarity on payment systems and ability to pay your taxes.
So I think there is that bucket of ease of doing business that today what we see on the contrary is a not so appealing business environment, but competition on sort of incentives, which essentially takes away all the economic value that you want to have from attracting these investors. And so, you know, I think that trade off is not a good one for the continent today and we must change that.
The second thing, of course, that I think is important is trying to see whether we can work regionally. I think Ede said it very well. You know, if you look at from platinum in South Africa to manganese in Gabon to cobalt in DRC, you’re already producing a car. Today we export platinum to geography B, manganese to geography B, cobalt to geography B, and geography B makes the car and sends it back to us. We could be the ones making those cars and sending it out. And I think that being able to do something, building off of the African Continental Free Trade Area agreement, is so critical.
[22:13]
We started doing some of this sort of regional integration development on the minerals front with the Lobito Corridor, the United States is the lead organizer on the Lobito Corridor working with regional development institutions like the African Development Bank, the African Finance Corporation, Africa 50, and others. I think that also is another way of leveraging Africa’s finances for Africa’s assets and developing Africa’s assets. We need a lot more of that.
And of course, if the DFC is $60 billion today, I just read somewhere that there is talk of making it a $250 billion Development Finance Corporation entity. I mean, that begins to say we can actually scale and scale really fast the development on on the continent. So we have the Lobito Corridor now, Angola, Zambia, DRC. Maybe you do another corridor — South Africa, Zimbabwe, Zambia, Kenya. Maybe you do another corridor in West Africa with Senegal, Côte d’Ivoire. We don’t talk about Côte d’Ivoire that much, but Côte d’Ivoire is a is a home to a lot of rare minerals.
So we can create these corridors on the continent that begin to build, you know, not only mining, but as Ede said, jobs, processing, we begin to industrialize. But we industrialize green because a lot of this are for a cleaner, better, and safer environment.
And finally it’s this private sector. How can we work with the private sector? There is knowledge in the U.S. private sector, there is technology transfer that is needed to be able to make sure that, you know, today we’re talking about CBAMs in Africa is complaining because the CBAM is an anti-competitive policy. But if we were able to join our forces, private sector in Africa, private sector in the United States, and have the latest technology in providing green steel or providing better windmills, then clearly Africa becomes not only competitive, but green competitive. And I think this is something that together we could do even better and faster.
SIGNÉ: Fabulous! Will you mind explaining CBAM to the audience?
[24:13]
SONGWE: The Common Border Adjustment Mechanism. This is a EU policy that essentially is trying to make sure that some of the larger polluting industries such as fertilizers and steel are green. And so the the method through which they are produced is is green essentially. It is a lot of the energy and what kind of energy is used for their production, but it’s also the production process, and and how that is done. Africa does not have the the technological know-how to do that today.
And so the argument is if you are going to do something like the Carbon Border Adjustment Mechanism, then share the technology that you have in the United States, Europe, and of course China so that Africa can adopt that. And it essentially is asking Africa to leapfrog, right?
SIGNÉ: Absolutely.
SONGWE: So as we get into these areas, we don’t need to make the mistakes of the past. We can just make sure that we leapfrog into cleaner production of this rare minerals and process them in a better way.
SIGNÉ: Fantastic, Vera. And I really like the connection of what you have said with what also Ede said previously, the opportunity, the business opportunity are not just related to mines, but also to infrastructure and many others, key sectors of the economy,
[25:28]
SONGWE: Health especially. There’s a lot of critical minerals that go into the production of health equipment. And essentially today we import all of that, whereas we have the raw material on the continent. So, you know, cancer scanning machines, chemotherapy, and all of that work. And the industry which we could develop on the continent today if we had the know-how, because we do have the raw ingredients.
SIGNÉ: Fabulous! And relatedly, what can African countries do to leverage regional integration, Vera, and coordination efforts for critical minerals value chains? What specific actions?
[26:07]
SONGWE: The good news is Africa has already done a lot. First of all, there is now today a an African Union-endorsed mineral strategy put together, I think, very, very well by the African Mineral Center out in Guinea. And I think that that lays the groundwork for where Africa wants to go.
Like with many things, then it becomes the implementation. How can we harmonize the laws? I spoke before about the fact that countries are providing incentives which are sort of competing each other down to the bottom. There’s a race to the bottom. Can we take that away? Can we do better at EITI [Extractive Industries Transparency Initiative] collectively so that there is more transparency across the region in how we manage, how we calculate taxes?
We just said that we want a lot of investment to come in, but we as Africans need to also put some resources in. Governments need to improve the roads so that when the the businesses come, there is easy access to the mine. There is water at the mine. That requires resources. That means that we need to improve our domestic resource mobilization. We need some kind of fund to help develop the sectors. We need maybe better management of our currencies. More regulatory certainty. Every change in government doesn’t need to require a change in contracts, even though sometimes it’s important, I hasten to say, to re-look at some of those contracts. And I think that increasingly there is more stability in our contracts. There is more transparency in the contracts. We don’t need to revise and open many of them, but if needed it is important maybe to look at them.
The other thing that we really need to do and we don’t have resources goes back to collecting better revenue is, as Ede was saying, we really don’t have a good sense of what really is the quality and the amount of rare minerals on our continent today, because we haven’t done enough exploration. We don’t know enough about what exists and what doesn’t exist. So there is a little bit more of that that can be done as we can continue to grow.
And in education, we talk about jobs. Yes, we want people to go work in the factories. But we also want people to be able to own those factories. We want people to be able to innovate with them. And that requires a lot more mineral mining schools on the continent. There’s a few that are coming up, but the technology is changing so fast that we ourselves need to begin to produce the manpower, the expertise, to be able to manage those mines ourselves and work on them in a way that is commensurate with what local communities are looking for, but the jobs that we need to create and the prosperity that is at the end of all of this.
SIGNÉ: Fantastic, Vera! Ede, from a private sector or business perspective, which African countries and which minerals do you see as possessing the greatest potential for return in the short to medium term?
[29:04]
IJJASZ-VÁSQUEZ: Look, I think that it is not only the potential for return, but it’s also the stability that good reliable supply chains give to industries in the U.S. If you are producing cars, if you are producing electronic equipment, if you are producing satellites, you want to have reliable sources. You don’t want a lot of back forth, where am I gonna be looking for these critical minerals? And therefore there’s a premium to the reliability.
So, Vera mentioned some of the big minerals are cobalt, and manganese, and the platinum group, that Africa has. Those are the easy ones. But in our report, we’re saying, look, they’re not the only ones. There are so many of these different options that one can look at in that process.
However, one of the big blockages, and this is where the African countries need to focus in their discussion, for example, with the U.S., is to say, okay, energy and transport. That’s where a lot of the cost and the reliability is made or broken. And therefore looking at those becomes also an important opportunity. And therefore we have a list of of some of those countries and some of those minerals.
But I think that the potential is far, far greater than people understand. But only when you start unpacking those issues. Only when you start moving away from critical minerals in Africa. Africa is a huge continent. Critical minerals is a large group of minerals. It’s that unpacking that is going to allow you to find those nuggets of really great business opportunities moving forward.
SIGNÉ: Fabulous, Ede! And Vera, what do you think about this?
[30:41]
SONGWE: Again, as I said, we have 35 countries, on the continent that have at least one. And so the competition is open. There’s 35 countries need to, exactly as Ede said, and I hope that people look at the report and read the report to see what those 35 countries are — exam question — and and see what they can and cannot do. But it is not only that you have 35 countries with the minerals, is that again they are on corridors.
And this is where in some sense the corridor approach or the AfCFTA is quite an important component that when a business comes to the continent, you don’t want to think, I’m just going to Country X. You want to think, I’m taking advantage of an enabling environment that allows me to reach out to a lot more of, you know, what I need for my business production.
And so it is important that, say, if it was manganese in Gabon and it was lithium in South Africa that once you realize that the AfCFTA is working and you can actually work in this environment because it makes it a lot more attractive, as Ede was saying, you start unpacking the components. You see that there is a rail that is uninterrupted from point A to point B. Then it becomes even more interesting. You see that the legal frameworks are the same. You see that the bankruptcy laws are the same. It becomes a little bit more interesting. So I think it’s that combination of things, the the stability of the legal system that makes it interesting.
And then of course, what we need is the stability of the macroeconomic environment, right? We don’t want investments in a place where the government is not going to be stable or we are going to be running into sort of debt situations. And that makes it very difficult for the private sector to come in.
SIGNÉ: Fantastic, Vera! And as Vera mentioned, the AfCFTA is the African Continental Free Trade Area, which is per the number of country, the largest free trade area in the world and aiming at creating a continental market in Africa.
So as you know from previous Foresight Africa podcast episodes, I love finishing this session with a couple of questions for all my guests. AGI looks at Africa from an economic perspective and we focus on how to maintain economic growth and structural change while fostering inclusion, especially for youth and women on the continent. Ede, building on your work and experience, what is one piece of advice you would give to African and global policymakers to ensure the best outcomes on the continent?
[33:34]
IJJASZ-VÁSQUEZ: Look, speed and ease are of the essence. Critical minerals globally is now a very, very competitive market. Africa is competing against Latin America with much better infrastructure and and energy and stability. You are competing against Indonesia. This is a global market and therefore it’s not just enough to say, I have the minerals, I have lots of them. It has to be speed and essence. Not only, oh, I can get to mining fast, back to how do I get the minerals, how do I get other industries around to be able to create those jobs? How do I get the special economic zones that get to work? That really perspective, that coordination across ministries, that is speed and is ease is of the essence.
SIGNÉ: Fabulous and very powerful, Ede. Vera, given your incredibly successful career and impact, what advice will you give to youth hoping to follow in your footsteps?
[34:35]
SONGWE: Listen, the African youth are already quite bright. There is huge innovation going. But I think not to be discouraged, and there is no secret to it, one has to work really, really hard. So I think it’s hard work. It is sometimes a challenging environment, both at home and outside. But I think a lot of hard work, a lot of persistence, finding the new niches, right? that one can go into and where one can work and then to to always, always try to be the best you can be.
SIGNÉ: What a beautiful way to conclude. Vera, Ede, thank you so much for joining me today.
IJJASZ-VÁSQUEZ: Thank you, Landry.
SONGWE: Thank you, Landry.
SIGNÉ: I am Landry Signé, and this has been Foresight Africa. Thank you, listeners, for joining me today.
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