THE NEXT GENERATION AFRICA’S WEALTH
As the world shifts to a greener and more digital economy, many of the much-needed minerals for that transition are found in Africa. But can its resource-rich nations fully enrich themselves? By Nicholas K. Smith, OPEC Fund HOW TO REVERSE THE RESOURCE CURSE
A ll it took were four little words to shift the fortunes of a continent: “A diamond is forever”. For much of history, diamonds were the rarest of the rare minerals; only royalty and the obscenely wealthy had them. Yet in the late 1800s, a discovery of diamond deposits in South Africa sharply increased their availability, just as a single company, De Beers, consolidated all that new supply. But in the ensuing decades, something happened that would be familiar to anyone even half-awake in an introductory economics class: decrease scarcity and you decrease prices. In the 1940s, De Beers was looking to rekindle interest in its product with a slick marketing campaign associating engagement rings and love that’s still with us today: if you want your relationship to last for eternity, remember “a diamond is forever”. Yet that’s only part of the story. The man consolidating all those nascent diamond mines and cornering the world’s diamond market for De Beers was its founder, the British-born Cecil
Rhodes. The De Beers Consolidated Mines, Ltd. made Rhodes fantastically wealthy, yet that wealth did not exactly flow to the areas that it came from. Substitute diamonds for any of the other natural resources Africa boasts and you have a mini-history of the continent’s economy over the last couple of centuries: outside nations find and extract a resource, becoming rich at the expense of the local population. Retaining that wealth for itself has long been the challenge faced by many African nations looking to break the resource curse. But it’s not just diamonds, gold, silver, petroleum or sugar the continent has an abundance of. As the world shifts to a green economy and becomes more digitized, the components needed to build computers, electric vehicle batteries, solar panels, motors and wires (lots of wires), that will mean a lot of lithium, copper, nickel and rare earth elements, which in turn are necessary for lasers, x-ray machines and countless applications in the defense industry. All of these resources can be found
in some abundance on the continent and they will be all the more critical as the world looks to build more and more climate-friendly technology. But as outside players heavily invest in their extraction, how can resource-rich African countries ensure they also enrich their own populations?
Cobalt is a girl’s best friend Chances are, you’ve carried a bit of cobalt in your pocket today.
Rechargeable batteries, like the ones in smartphones, need cobalt. And as the world builds more and more phones, computers, electric cars and anything else that needs a rechargeable power source, those will need cobalt too (along with lithium, copper, nickel and other so- called “green metals”). According to recent data from the United States Geological Survey (USGS), in 2022 US cobalt extraction came to 800 tonnes. The world’s second largest economy, China, mined 2,200 tonnes of it in the same period. These two numbers hardly stack up to what the world leader in cobalt produced. That
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