Before the 1960s, the region now known as the United Arab Emirates (UAE) had a subsistence economy centered on fishing, pearling, and nomadic herding. Communities were close-knit, relying on strong tribal ties, local teachers, and traditional healers to endure the desert’s hardships. However, this changed dramatically in the latter half of the 20th century. Today, cities like Dubai and Abu Dhabi stand as modern marvels, with the UAE boasting the world’s fifth-largest GDP per capita. The catalyst for this transformation was the discovery of vast oil reserves, revolutionizing the economy and the lives of its people.
Now, humanity faces the challenge of transitioning away from oil and fossil fuels to preserve the climate. Future economies will rely on renewable resources like wind, solar, and water. However, building and maintaining the necessary infrastructure—such as wind turbines, solar panels, and electric vehicles—requires significant natural resources. This shift brings new opportunities. A select few countries possess substantial reserves of ‘critical minerals,’ positioning them to thrive as the new beneficiaries in the natural resource lottery, akin to petrostates like the UAE during the ‘Age of Oil.’
What are These Critical Minerals?
Lithium: A crucial mineral for the energy transition, lithium serves as a key component of lithium-ion (Li-ion) batteries used in electric vehicles (EVs) and battery energy storage systems. Australia (6.2 million tonnes) and Chile (9.3 million tonnes) possess the world’s largest lithium reserves.
Cobalt: Essential for Li-ion batteries, cobalt ensures stability and longevity by preventing overheating. The Democratic Republic of Congo (DRC) dominates global cobalt supply, possessing nearly half of all cobalt reserves worldwide.
Copper: Vital for the energy transition, copper is a key component in modern electrical systems and renewable technologies like solar panels and wind turbines. Chile holds the majority of global copper reserves, with 190 million tonnes valued at $1.6 trillion.
Nickel: Nickel plays a crucial role in Li-ion batteries, especially in advanced cathode chemistries. Australia and Indonesia hold the largest nickel reserves globally, each with 21 million tonnes, valued at approximately $425 billion today.
The Evolving Landscape of Critical Minerals
While these critical minerals are currently essential for the energy transition, the importance of certain minerals or the emergence of new alternatives may change over time due to ongoing research and development. Despite these uncertainties, examining the current critical mineral landscape provides insight into which countries might become the new petrostates in a net-zero world.
Key Players in the Critical Minerals Market
China, the US, and Australia are not only economic powerhouses but also possess significant reserves and expertise in mineral mining. They dominate numerous value chains and hold essential mineral reserves critical for various energy transition industries. Their influence will likely shape mineral prices, with other countries relying on them for investment and technical support.
Additionally, Canada emerges as a significant player, being one of the few Western nations abundant in cobalt, graphite, lithium, and nickel. Canada tops the list for corporate ownership of operational critical mineral mines, with a total production of 508 million tonnes per annum (mtpa) overseas and an additional 118 mtpa domestically as of 2022. According to GlobalData, the largest Canada-based companies by total mine ownership include Centerra Gold, with 14 mines in North America, and EMX Royalty Corporation, a precious, base, and battery metals royalty company, with 15 mines across Canada, the US, and Sweden.
The Race for Resources: China and India’s Critical Minerals Competition in Africa
As countries scramble for dominance in the critical minerals market, the landscape is heating up, particularly in Africa. China has historically been aggressive in securing mineral resources across the continent. Chinese companies have made significant investments in critical mineral mines in Africa, aiming to control supply chains for essential resources like copper and cobalt.
Data from GlobalData shows that China currently controls an estimated 8% of Africa’s resources, with substantial stakes in facilities like the Tenke Fungurume mines in Congo, which produce 12% of the world’s cobalt. State-owned companies, like Zijin Mining, hold notable stakes in these mines, solidifying China’s position as a leader in the critical minerals race.
On the other hand, India is ramping up its efforts to secure critical minerals, aiming to challenge China’s dominance. In recent years, India has signed Memorandums of Understanding (MoUs) with at least eight African nations, including South Africa, Mozambique, and Zambia, to focus on minerals like copper, cobalt, niobium, and lithium. These agreements are designed to enhance India’s access to vital resources needed for its burgeoning electric vehicle market and renewable energy initiatives.
In light of ongoing geopolitical tensions, this competition reflects a broader struggle between China and India to secure the essential resources needed for their economic futures. As both nations continue to expand their influence in Africa, the outcomes of this race will likely shape global supply chains for critical minerals and impact future energy transitions.
Conclusion
The race for critical minerals is intensifying as the world transitions towards renewable energy. Countries like China, the US, Australia, and Canada are leading the charge, leveraging their significant mineral reserves and mining expertise. However, emerging players like India are strategically positioning themselves in regions like Africa to secure essential resources and challenge existing dominance. The dynamic landscape of critical minerals will shape the future of global energy, and those who can navigate this complex terrain will be the new powerhouses in a net-zero world.
