Africa: Which countries stand to benefit economically from AU-EU Summit?

By Conrad Onyango

Posted on February 16, 2022 10:46

A hostess is seen during the 5th African Union – European Union (AU-EU) summit in Abidjan © An hostess is seen during the 5th African Union – European Union (AU-EU) summit in Abidjan, Ivory Coast November 29, 2017. REUTERS/Thierry Gouegnon
An hostess is seen during the 5th African Union – European Union (AU-EU) summit in Abidjan, Ivory Coast November 29, 2017. REUTERS/Thierry Gouegnon

Africa has a huge opportunity: the EU’s new strategy for critical raw materials calls for diversification in supply chains, potentially opening up a big market for Africa’s lithium, graphite, cobalt, nickel and rare earth elements, not to mention other “green future” opportunities. Can we stand together and speak as one?

Over the last decade, there has been a surge in high-level summits involving African leaders with the world’s biggest economic blocs and with individual economies like Japan, China and Russia. These are almost always sold as ‘win-win’ partnerships to build ‘better future relations.’

The scramble for political and economic influence in Africa by these world powers has become familiar now – and the jostle for Africa + 1 summitry seems only to be gaining steam.

As African leaders again prepare to travel to Brussels this February for the sixth summit of EU and AU heads of state and government, there is a pertinent question: what does Africa have to gain and how can African leaders ensure this really is a win-win for the whole continent?

French President Emmanuel Macron in December 2021 affirmed he will be seeking to “rebuild an economic and financial New Deal with Africa” as a priority among his programmes for the country.

Ahead of the Summit scheduled for 17-18 February 2022, African thought leaders have begun reflecting on how to deepen this particular ‘win-win’ relationship.

Africa Investment Forum Senior Director, Chinelo Anohu, during a public hearing on African trade and finance held Monday 24th January, called for a decisive partnership.

“There’s been a lot of talk and a lot of research but now it’s time for action. And how do you have this action translate properly on the continent? By very quickly, clearly, concisely, looking at the transactions themselves,” she said.

But what exactly are the opportunities?

In December 2021, the EU unveiled a €300bn, “Global Gateway” investment strategy, outlining green transition and access to energy, the digital transition, growth and employment, and peace and migration as its key areas of interest.

The strategy document suggested the EU would step up its offers to its partners, with major investments in infrastructure development around the world.

”We will support smart investments in quality infrastructure, respecting the highest social and environmental standards, in line with the EU’s values and standards. The Global Gateway strategy is a template for how Europe can build more resilient connections with the world,” said Ursula von der Leyen, President of the European Commission.

While the multibillion investments are pinned on, among others, strengthening health, education, digital and climate change transition and research systems across Africa and the world, here is the bigger picture: The EU is looking for new ways to power its low-carbon economy and transition to a green future by becoming a climate-neutral bloc by 2050.

To support this mega transition, it will require a huge, diverse and sustainable supply of rare earth metals and other critical raw materials for the production of wind turbines, solar panels, robotics and electric cars from resource-rich countries, many of which are in Africa.

Better still, the EU’s new strategy for critical raw materials seeks to cut dependence on an Asia, and especially China, that dominates its supply chain, via a diversification plan that calls for sourcing from a wider range of other countries.

“Secure trade agreements with third countries and employ economic diplomacy for cobalt, lithium, natural graphite and nickel class-I to reduce supply risks” reads in part the EU Foresight report, ‘Critical Raw Materials in Technologies and Sectors.’

The sentiment is the same for the supply of rare earth elements with the direction in this segment being partnerships and participation in various ongoing and future exploration projects at a global scale.

According to the Foresight report, in 2050, the EU’s electric vehicle fleet is estimated to reach more than 250 million units while expansion of wind and solar power plants to 2,500GW will push up demand for lithium, graphite, cobalt, nickel and rare earth elements.

Bottom line

Anohu termed the €300bn earmarked for the Gateway strategy as “a start”, affirming the strategy would “need a lot more.” “But this is something that is very exciting to us at the Africa Investment Forum because it clearly charts a path where we can have a collaborative effort and ensure that deals on the continent have fruition,” she said.

Under a net-zero emissions scenario, the IMF says the booming demand for copper, nickel, cobalt and lithiumthe four energy transition metals alone would boost their production value six-fold to $12.9trn, over two decades.

A number of resource-rich African countries including the DRC, South Africa, Madagascar, Zimbabwe and Botswana stand to benefit in the new EU-AU summit.

For instance, the DRC accounts for about 70% of global cobalt output and half of global reserves, with an estimated production capacity of 100,000 metric tonnes, according to Statista. Copper production stood at 1.5 million metric tonnes in 2019.

Nickel production in Madagascar is estimated to reach 9,900 metric tonnes in 2020 as lithium production in Zimbabwe soars to 65,000 metric tonnes in 2021. Botswana and Zimbabwe also have nickel while South Africa has copper and lithium resources.

Africa also boasts reserves of that rarest of rare earth metal – scandium. It has the ability to increase the strength and reduce the weight of vehicle components and is beginning to show up as the most potent alloy for most electric vehicle-making metals.

In the second AU-EU ministerial meeting held in Kigali Rwanda, October 2021, ministers from the two regions underlined the potential offered by a “just transition” to a green, circular and climate-neutral economy.

They also emphasised the importance of a safe, sustainable and inclusive digital transformation. The big question now is whether African will leaders stand together to capitalize on the growing external demands on African resources, to bag meaningful deals that can benefit the entire continent.

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