A growing number of resource-rich nations are planning to restrict exports of unprocessed raw materials, explain Gracelin Baskaran and Cy McGeady at CSIS. Currently, a significant proportion of critical minerals are exported to China for processing, giving it monopoly power in the value chain. If countries like the DRC, Namibia, Ghana, Zimbabwe, and Indonesia instead processed their own raw materials they would create skilled jobs and industries for themselves while dispersing the world’s processing capacity – a much more stable system. The authors recommend the U.S. and its allies proactively support this change, noting that it aligns with its own efforts to on-shore value-added industry back to the U.S.
Resource Nationalism Is Not the United States’ Biggest Minerals Problem
Malaysia has made international headlines by advancing policy that would restrict the export of unprocessed rare earth elements. This news is only the latest data point in a strengthening global trend. Indonesia, Ghana, Zimbabwe, and Namibia have advanced similar raw material export bans in recent years. Policymakers need to consider how to position the United States in relation to this pattern.
The single most important strategic objective for the United States in relation to minerals policy is reducing reliance on minerals processing capacity in China, the current destination for most raw mineral exports. Raw material export bans would encourage the construction of processing facilities in producer countries, allow them to claim a larger share of the value chain, and encourage the global dispersion of processing capacity that is today dangerously concentrated in China.
In fact, this approach epitomises the “new Washington Consensus,” as presented by U.S. national security advisor Jake Sullivan. He notes that the United States “will unapologetically pursue our industrial strategy at home—but we are unambiguously committed to not leaving our friends behind. We want them to join us.” Accordingly, U.S. policymakers should seek to leverage export bans to advance both U.S. and producer country interests.
Why the Status Quo Needs to Change: The DRC Example
The Democratic Republic of Congo (DRC), which has no export ban in place, is an example of why building in-country processing facilities should be a strategic U.S. objective. Last year, the Democratic Republic of Congo exported $4.4 billion of cobalt—100 percent of it went to China. Developing the DRC’s domestic processing capacity would reduce China’s function as a processing intermediary, a result that de-risks global supply chains key for both military hardware and energy technology.
A New Opportunity: Building a Namibian Example
When looking at countries that have recently rolled out export bans, Namibia is an excellent example of where building in-country processing capacity could align with the new Washington Consensus. Namibia is a particularly attractive example as it is resource rich and has strong trade ties to the United States.
First, consider the diversity and scale of Namibia’s critical minerals reserves. Namibia’s Lofdal heavy rare earths operation produces 2,000 tons per year of rare earth oxides and has rich deposits of two of the most valuable heavy rare earth metals, which are required for a range of national and energy security applications including defence systems, lasers, electronics, and renewable energy technologies. Namibia also has the largest uranium reserves in the world, with 470,100 tons. This resource would be highly valuable to hopes of a nuclear renaissance in the United States based on small modular reactor technology.
Namibia has considerable copper reserves, which was the country’s third-largest export in 2021. Namibia also has significant cobalt reserves—though production commenced in 2020, it exported nearly a million kilograms during the 2021–22 period. Namibia is also a leading producer of zinc and has reserves of fluorspar, and it is set to be the third-largest lithium producer in Africa by 2026.
Namibia’s diverse and rich resource endowment and its status as one of the most politically stable and well governed countries in Africa makes it well suited to host an emergent industrial processing ecosystem. The United States has the capital and technical expertise to expand Namibia’s ability to benefit from its resources—which responds to the very intention of their ban on unprocessed critical minerals.
Namibia has a long history of trade ties with the United States. It is a key beneficiary of the African Growth and Opportunities Act, an U.S. unilateral trade preference program. Namibia has indicated that it wants to scale up trade under the AGOA to new sectors, including horticulture, fisheries, and textiles. However, a partnership centred on critical minerals would transform this into a mutually beneficial strategic economic partnership.
A New Era Requires New Ideas
The opportunity presented by the Namibian case demonstrates how export bans should be considered an opportunity to demonstrate the coherence of the new Washington Consensus. First, it moves beyond “traditional trade deals [into] innovative new international economic partnerships focused on the core challenges of our time.” Distributing critical mineral supply chains is arguably the greatest geoeconomic challenge of the energy transition era, but the proliferation of raw material export bans in key mining jurisdictions and coincident expansion of processing capacity presents the United States with the opportunity to secure that key strategic objective.
Second, this policy approach accepts the strategic interests of producer countries, and responds by investing in their economic “capacity, resilience, and inclusiveness.” In an era in which the United States has embraced domestic-first industrial policy, U.S. global leadership hinges on our ability to accept and work with other countries’ economic objectives.
Many resource-rich countries’ ambition is to move beyond economies excessively dependent on extraction. Instead, they seek to secure a larger portion of the value chain, to industrialise, generate jobs, and secure a foothold in the global economy of the future. Indonesia’s ambition to develop an EV manufacturing sector on the back of its nickel resources leads the way in this respect, but a consensus on this approach has emerged across Asia, Africa, and South America. In supporting, rather than opposing, this trend, the United States can truly “export” the new economic paradigm advanced by the Biden administration.
Countries seeking to establish export restrictions on raw resources are signalling that they seek diplomatic and economic engagement in the critical minerals sector. This is where the United States can accelerate its global climate and development leadership, expand its friend-shoring network, and secure strategic mineral security interests.
Raw export bans may feel antagonistic at initial glance, but they represent a powerful opportunity to strengthen security of supply chains, reduce the world’s reliance on China for processing, and advance mutually advantageous economic development.
Gracelin Baskaran is Research Director and Senior Fellow, Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS)
Cy McGeady is an Associate Fellow, Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS)
This article first appeared on September 15th 2023 and is published with permission.
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