Coverage of the G20 Summit in New Delhi has largely focused on the announcement of the ambitious new rail and shipping corridor linking India, the Middle East and Europe, as well as President Joseph Biden’s handshake with Saudi Arabia’s Crown Prince Mohammed bin Salman at the event.
However, it may be the doubling down of the United States’s support, now joined by the European Union, for the Lobito Corridor connecting Angola, the Democratic Republic of the Congo and Zambia, that may prove most impactful geopolitically. Washington and its allies seek not only to counter China’s “Belt and Road” global infrastructure push, but also to secure the critical minerals needed for the energy transition and future technology.
At their 2021 summit in Cornwall, United Kingdom, the leaders of the G7 group of democracies with top-tier economies discussed strategic competition with China. The result was the announcement of the “Build Back Better World” initiative to help narrow the $40 trillion-plus infrastructure needs of developing countries.
When they convened the following year, the G7 formally launched the “Partnership for Global Infrastructure and Investment” with Biden signing a memorandum to the heads of federal departments and agencies detailing a five-year, $200 billion U.S. commitment that would be part of the overall $600 billion pledge made by the G7 partners.
The second U.S.-Africa Leaders Summit in Washington at the end of 2022 provided the stage for a raft of announcements. Some were admittedly repackaging of previous undertakings, but some gave more definition to the agenda, including a memorandum of understanding between the United States, the Democratic Republic of Congo and Zambia to develop electric vehicle battery value chains and a new initiative on Digital Transformation in Africa.
All of this served to lay the groundwork for the G7 Summit announcement about the Partnership for Global Infrastructure and Investment‘s leadership structure and organizational goals. It outlined a plan to invest in key economic corridors “through key transportation infrastructure,” by making clean electricity “more affordable, reliable and available to all,” strengthening rural “information and communications technology,” utilizing agricultural hubs for food security, improving health care access and “aggregating demand for clean energy solutions to fuel these corridors and service local communities.”
Singled out as a model was the development of the Lobito Corridor. What began as the refurbishment and expansion of a railway from the Angolan port of Lobito into an open-access transportation infrastructure connecting Angola to its mineral-rich neighbors in the Democratic Republic of Congo and Zambia, was strategically reimagined to also include energy, digital infrastructure access and U.S. Trade and Development Agency programming.
The Export-Import Bank has approved for congressional notification an initial $900 million financing package for two solar projects developed by two U.S. companies, AfricaGlobal Shaffer and Sun Africa. It also approved digital infrastructure and access and U.S. Trade and Development Agency programming under Digital Transformation in Africa, working with the only U.S.-owned mobile telecommunications operator in Africa, Africell. (Full disclosure: I am a non-executive director of Africell Global Holding).
One of the reasons why the Lobito Corridor is of particular importance to the United States and its allies is the imperative to diversify supply chains for critical minerals and other materials that hold the key to the energy transition. As I have argued here previously, the biggest threat is that any one country or entity so dominates supply chains that it is able to block access to key materials, short-circuiting any energy transition. It is not about just accessing the minerals, which the Democratic Republic of Congo, Zambia, and other African countries have in abundance, but practically supporting their ambitions to process and capture more of the upstream value chain that will de-risk supply chains for America and other countries.
The White House fact sheet acknowledged as much when it noted that since its announcements about the Lobito Corridor in May, the U.S. and its allies “are advancing efforts to support a transparent and developed critical minerals sector that can both diversify the global electric vehicle supply chain and benefit local economies.”
Moreover, that diversification also benefits African countries that are producers of critical minerals. Secretary of State Antony Blinken recounted this week to a Washington audience that, when he visited the Democratic Republic of Congo last year, “President [Félix] Tshisekedi said that Lobito is the choice that they’ve been waiting for — a chance to break from the exploitive, extractive deals that they had had to accept for far too long.”
Just last month, Canadian mining company Ivanhoe Mines announced it had signed an MOU as the first commercial exporter to use the Lobito Corridor, with some 10,000 tons of copper concentrate to be moved by this route before the end of this year. Ivanhoe operates the Kamoa-Kakula mine, which has the highest-grade copper in the Democratic Republic of Congo, the world’s second-largest producer of the metal. Currently, Kamoa-Kakula must truck its production to ports in South Africa, Tanzania, Mozambique and Namibia — a process that is both time-consuming and energy-intensive.
What was news from the G20 was the EU’s inclusion in the partnership and the Lobito Corridor project. This includes the sponsorship of feasibility studies for the construction of a greenfield rail line from eastern Angola to Zambia — and, eventually, possible expansion all the way to the Indian Ocean, thus embracing mineral-rich Tanzania and energy-flushed Mozambique.
The U.S. and the EU aim to cooperate “in the areas of transport infrastructure investments,” “measures to facilitate trade, economic development and transit” and “support to related sectors to fuel inclusive and sustainable economic growth and capital investment,” in Angola, the Democratic Republic of Congo and Zambia. This includes “developing clean energy projects to increase the power supply to surrounding communities, supporting diversified investment in critical minerals and clean energy supply chains, extending digital access, growing agriculture value chains.”
As the joint statement with the EU noted: “This represents a powerful evolution of the partnership element of the Partnership for Global Infrastructure and Investment with a collaborative approach that could be replicated in other strategic corridors.”
A corridor bringing clean power to eastern Guinea would enable local processing of some of the richest iron ore deposits on the planet, producing not only some of the greenest inputs to steel to date but also frustrating Chinese efforts to reduce its dependence on U.S. ally, Australia, which currently supplies China with 60 percent of its iron ore. A multi-user, multi-purpose corridor connecting the remote eastern Guinea to global markets via a short-cut to the ocean in Liberia would facilitate the unlocking of the region’s resources by U.S. and other partners already active there while preventing China, which is steadily encroaching, from gaining the sort of dominance in West African mining that it has in other parts of the continent.
In his remarks in New Delhi, President Biden said the Lobito Corridor was about more than “just laying tracks,” but also “creating jobs, increasing trade, strengthening the supply chains, boosting connectivity, laying foundations that will strengthen commerce and food security.” He called it a “game-changing regional investment.”
Indeed, given the critical building blocks for future technology at stake in Africa’s resources, if properly implemented, the Lobito Corridor might well prove to be an even bigger geopolitical and geo-economic game-changer than the corridor across the already well-served Middle East.
Source : The Hill