The European Union (EU) faces significant challenges in securing a steady supply of critical minerals from Africa, despite the continent holding about 30% of the world’s reserves of these resources. While the EU has made efforts to diversify its sources of strategic minerals, the situation is complicated by several factors that hinder European companies from establishing a stronger presence in Africa, where competition from countries like China, Japan, South Korea, and the United States is intensifying.
One of the key obstacles is the cost of adhering to stringent social and environmental standards (ESG) set by the EU. These regulations raise the operational costs for European companies, making them less competitive compared to other international players, particularly those from China, who may offer more favorable terms to African governments. Additionally, the EU has been criticized for not providing sufficient support to incentivize European private sector investment in Africa, leaving many companies without the necessary financial backing or guarantees to secure critical mineral supplies.
As a result, countries like the Democratic Republic of Congo (DRC) and Namibia, rich in essential minerals like rare earths and cobalt, are attracting more investment from non-European nations. The EU’s own initiatives, such as the Lobito Corridor project, aimed at improving the region’s infrastructure and creating stronger ties, have not yet yielded significant investment from European firms. This imbalance has allowed new players like South Korea, Japan, the UAE, and Saudi Arabia to increase their footprint in Africa’s critical mineral markets.
However, there are emerging opportunities for the EU. For instance, Belgium’s Umicore has entered into agreements with the DRC to process germanium, a critical metal primarily sourced from China. Similarly, the UK and Australia are developing rare earth projects in Angola and Uganda, which could potentially secure some of Europe’s supply on European soil. These developments could provide an avenue for European companies to become more involved in the African mineral supply chain.
To foster greater involvement, experts suggest that the EU should offer incentives such as price guarantees to shield investors from market volatility. These measures would make it easier for European companies to invest in Africa’s mineral extraction and processing, potentially benefiting both Europe and Africa. Africa, which currently earns a limited share of the value from its mineral resources, could gain more from its reserves if it becomes more integrated into the global supply chain for critical minerals.
In summary, while the EU faces challenges in competing for Africa’s critical minerals, there are opportunities to develop a mutually beneficial partnership with the continent. To capitalize on these opportunities, the EU must overcome the barriers of competition from other international players and ensure that European companies are adequately supported in their efforts to secure these vital resources.