Judul : US Surpasses China as Africa's Top Foreign Investor
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US Surpasses China as Africa's Top Foreign Investor
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"The U.S. government has shown strong support for our efforts to bring that supply chain directly to the United States," states company chairman Shawn McCormick.
You likely don't spend much time thinking about the device you're using to read this article, as long as it appears functional and performs well.
However, the components that drive and operate it are at the center of a growing conflict between the world's two largest economies—the United States and China—with African nations caught in the middle.
Africa is abundant in key minerals and metals—such as lithium, rare earth elements, cobalt, and tungsten—which are crucial for producing and operating our personal technology. These resources are also necessary for a wide range of applications, including electric vehicles, AI data centers, and military systems.
China has historically been the leading participant in the worldwide market for essential minerals and metals. It possesses substantial domestic reserves and has access to resources from abroad due to significant investments in foreign mining projects – especially in Africa.
Beijing has also established a strong position in handling global supplies, and it has alarmed the US by threatening to limit exports. This has increased the sense of urgency for US efforts to enhance its access to essential minerals and metals, with African reserves considered crucial for this goal.
It is indeed true that the US has quietly surpassed China as the leading foreign direct investor in Africa, based on the most recent annual statistics. In 2023, the US invested $7.8 billion (£6 billion) across Africa, while China invested $4 billion, according to the China Africa Research Initiative at Johns Hopkins University, which analyzed official data.
It signifies the first time since 2012 that the United States has reclaimed the top position.
This U.S. investment initiative is spearheaded by a government organization known as the U.S. International Development Finance Corporation (DFC). It was created in 2019 during President Trump's initial term in office, and it openly states that its goal is to challenge Beijing. According to the DFC's website, it was founded as a way to "counter China's influence in key regions."
What implications does this investment hold for African companies and nations that benefit from it?
A year ago, the Rwandan company Trinity Metals obtained a $3.9 million grant from the DFC to support the development of the three mines it operates within the country, which produce tin, tantalum, and tungsten.
"The U.S. government has shown strong support for our efforts to bring that supply chain directly to the United States," states company chairman Shawn McCormick.
Trinity now transports tungsten from Rwanda to a processing facility in Pennsylvania. It has also reached an agreement to ship Rwandan tin to a smelting plant in Pennsylvania.
Mr. McCormick refutes the claim that financial support from Washington affected the company's choice to deliver goods to the United States.
This was not the US government that told the CEO and me, 'could you please bring that tungsten to America?' It's our choice as participants in the commercial market.
Trinity is held by 5% ownership of the Rwandan government, with the Irish critical minerals investment company TechMet also serving as a shareholder.
Mr. McCormick notes that although certain mining activities in Africa may employ untrained personnel working in hazardous environments, Trinity adheres to the most rigorous standards.
We have demonstrated that it is possible to manufacture these materials in a manner that is free from conflict, child labor, and is professionally managed, while also paying taxes, respecting the community and the environment, and generating employment and opportunities.
Sepo Haihambo, an economist and former executive at FNB Namibia, asserts that African countries should be firm in defending their national interests during negotiations with American entities and should not anticipate any special treatment.
To expect [the Americans] to arrive and engage in discussions, suggesting terms that serve Africa's best interests on behalf of Africa, would be impractical," she states. "Therefore, Africa must get ready for these interactions and have a clear understanding of what [results] it seeks.
Ms. Haihambo notes that African governments need to move beyond basic cash-for-minerals agreements. "There is a chance to explore alternative models," she mentions.
You might consider production sharing agreements, joint venture structures, or local equity involvement. In the end, this can provide African nations with the chance to establish, perhaps, sovereign wealth funds that can subsequently invest in development sectors such as education, healthcare, and more.
She also hopes to witness increased processing of minerals and metals within Africa, instead of just exporting the raw ores abroad, as this would generate greater financial benefits.
A U.S. company currently developing a key minerals and metals refining facility in Africa is ReElement Africa, which is part of the American Resources group. ReElement Africa is setting up the refinery within the Gauteng province of South Africa.
"It was highly fulfilling to recognize that we could collaborate with African nations to establish refining facilities near the resources within mining projects, allowing for greater value capture, training of local workers, development of an economy in that region, and laying the groundwork for future industrial growth," says Ben Kincaid, CEO of ReElement Africa.
Nevertheless, Professor Lee Branstetter, an international economist from Carnegie Mellon University in Pittsburgh, claims the United States has overlooked an opportunity.
He claims that Trump's trade tariffs imposed on African countries have dampened interest in the US throughout the continent, especially as some people in sub-Saharan African nations have expressed concerns that Chinese investments are not providing sufficient benefits to local communities.
"If the current administration hadn't arbitrarily imposed tariffs on numerous African nations without a clear justification, the United States might have been in a stronger position to gain from African dissatisfaction with Chinese initiatives," states Prof Branstetter.
Moving ahead, the US and China might also face heightened competition in Africa from other nations, says Ms. Haihambo. She highlights the growing interest in the continent from countries like Brazil, India, and Japan.
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