The technology sectors – led by smartphones – have driven an explosion in demand for rare earths, but in addition, more supplies are needed to meet the growing needs of so-called green industries. A single wind turbine requires more than 1tn of rare-earth elements and electric-car engines are equally greedy. This is a paradox at a time when the urgency of climate change requires a drastic reduction in the growth and operations of extractive industries.
Projects and takeovers
Not a week goes by without the signing of a concession contract or an international company purchasing a rare-earth mining project in Africa. The sums involved give an idea of what is at stake.
In July, Mkango Resources announced that its Songwe Hill rare-earths mine in Malawi is expected to go into production in 2025. The Canadian company anticipates its investment – $277.4m – to be fully recovered within 2.5 years of operation and that $2.1bn will be generated in cash flow over the mine’s estimated 18-year life.
In May, Australia’s Bannerman Energy announced that it had acquired a 41.8% stake in Namibia Critical Metals, which owns 95% of the Lofdal rare-earths project in Namibia, for A$7.24bn (about $4.8bn). The deal was done via a share swap with South Africa’s Philco Systems and Britain’s Adventure Resources Holdings.
In 2020 Angolan President João Lourenço granted exclusive mining rights for 35 years to the Longonjo mine – which produces neodymium and praseodymium, among other rare-earth elements – to Ozango Minerais, the Angolan subsidiary of the British company Pensana Rare Earths. The prospects are huge for the British group, which is planning a total investment of $494m over the entire chain, and said in March that it expected annual revenues of more than $970m.
But although the rare earths will be mined in Angola, the processing plant – where most of the added value will be created – will be located in Hull, Yorkshire, England. According to the agreement signed with Angola, the country will receive a mining royalty corresponding to 2% of the mine’s revenues, in addition to national and municipal taxes. The British will be exempt from these taxes during the first two years of operation and have also obtained complete exemption from customs duties on imported equipment.
This practice is repeated in almost all projects launched or in development on the continent. In this race to gain control of rare earths, Africa has become a new El Dorado. But Africans themselves are far from benefiting from the wealth and dividends produced by this new and highly polluting sector. Where are the most advanced projects? Who owns them? How can African decision makers counteract the curse of natural resources?