Competition intensifies over essential minerals

Competition intensifies over essential minerals

In the modern world, resource-rich countries face a unique challenge: harnessing their mineral wealth for economic development while avoiding the pitfalls of the so-called "resource curse." This curse, which can lead to economic distortions, inequality, political instability, and environmental harm, is a daunting prospect for nations blessed with critical minerals needed for clean-energy technologies and industry.

Botswana, for instance, recently acquired a 15% stake in De Beers and is seeking to ensure that diamond cutting, not just mining, occurs domestically. This move is part of a broader strategy to diversify the economy, reduce dependence on mineral revenues, and promote local development.

Key strategies for managing critical minerals include diversifying the economy, implementing transparent and equitable revenue management, promoting local development, strengthening institutions and governance, and ensuring environmental sustainability. However, challenges abound. Economic volatility, inequality and regional disparities, political distortions and corruption, environmental degradation, and limited linkage effects are all potential hurdles.

China, a global leader in the control of critical minerals, owns or controls an estimated 60-80% of those needed for industry and the green transition. Its influence extends across the supply chain, including heavy investments in mining across Africa, Central Asia, and Latin America, and building up processing capabilities.

The European Union is also making moves to secure its own mining contracts, such as in the Democratic Republic of the Congo (DRC), which is touted as the "Saudi Arabia of critical minerals." However, the advance of the Rwanda-backed M23 rebels in eastern Congo is fueling bloodshed and creating an opportunity for outside powers to gain access to critical minerals.

The DRC-Rwanda peace agreement brokered by the Trump administration promises access to critical minerals to the US, in exchange for security guarantees. Yet, many mineral-rich countries are falling short in managing risks raised by resource extraction, including health, environmental, and labor-related issues.

To navigate these complexities, inward-facing institutions play a critical role in governing how resource revenues are used to translate resource endowments into economic development and improvements in human well-being. This requires strong institutions and governance to prevent rent-seeking behavior and corruption, ensuring accountable resource management frameworks and rule of law.

Boycotts of critical minerals from conflict zones or countries using forced labor could also convince multinationals and foreign governments to demand better enforcement of environmental and social standards. As the world moves towards a greener future, the stakes are high for resource-rich countries to adopt integrated economic, social, fiscal, and environmental policies alongside strong institutional reforms to harness critical mineral wealth for sustainable development and to mitigate the resource curse.

Rabah Arezki, a former vice president at the African Development Bank, is Director of Research at the French National Center for Scientific Research and a senior fellow at Harvard Kennedy School. Rick van der Ploeg, Professor of Economics at the University of Oxford and University Professor of Environmental Economics at the University of Amsterdam, also emphasises the importance of these strategies.

In December 2024, China restricted exports of critical minerals to the US in retaliation for US restrictions on exports of advanced microchips to China. This highlights the geopolitical implications of controlling critical minerals and the need for mineral-rich countries to defend their interests and make the most of their endowments.

Ultimately, it is up to mineral-rich countries to take the lead in managing their critical minerals for sustainable development, starting with efforts to strengthen institutions.

1. Carbon emissions from industries relying on critical minerals contribute significantly to climate-change, necessitating the implementation of stringent environmental regulations.
2. In environmental-science and policy-and-legislation, the importance of biodiversity conservation in areas impacted by deforestation due to mining activities is being increasingly recognized.
3. SDG goals, particularly those related to economic development, industrialization, and environmental protection, must be integrated into the management strategies of resource-rich countries to avoid the resource curse.
4. The manufacturing sector, heavily reliant on critical minerals, needs to transition towards more sustainable practices, reducing its carbon footprint and ensuring energy efficiency.
5. Finance institutions and investors should consider the environmental, social, and governance (ESG) risks associated with mining and investing in projects that promote sustainable development and personal-growth.
6. Data-and-cloud-computing and technology companies can help in monitoring and assessing the sustainability performance of industries involved in the extraction and processing of critical minerals.
7. In the realm of education-and-self-development, understanding the complexities of managing critical minerals is crucial for students and professionals aiming for careers in business and environmental-science.
8. Shopping choices can also contribute to sustainable development; consumers are encouraged to support businesses promoting transparent and ethical sourcing of critical minerals.
9. War-and-conflicts fueled by competition over critical minerals exacerbate economic, social, and environmental problems; strengthening global policy-and-legislation and diplomatic efforts are essential for mitigating this danger.
10. General-news outlets play a vital role in informing the public about the challenges and solutions in managing critical minerals, fostering informed public debates and decision-making.
11. Scientists, policymakers, and industry leaders must collaborate globally to find innovative solutions for sustainable management of critical minerals, ultimately shaping a greener and more equitable future for all.

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