U.S. Seeking Increased Investment in African Mining to Counter China’s Influence

The Trump administration is aiming to increase funding for mining initiatives in Africa, hoping to diminish China’s dominance in critical minerals. The U.S. International Development Finance Corporation (DFC), an agency that supports business and project funding in developing countries, is planning to widen its investments in important operations, particularly those related to Africa’s critical minerals. This new strategy could mean that the U.S. would take ownership stakes in some projects rather than just lending money, which may enhance its financial involvement in supply chains largely controlled by China.

Anupam Ghildyal, chief growth officer of REalloys Inc., remarked that DFC’s backing of African critical minerals represents a significant move towards diversifying America’s mineral supply chains. Africa possesses vast mineral resources, and increased U.S. investment could help ensure access to these important materials.

China currently holds a significant position in the global processing of critical minerals like rare earth elements, cobalt, lithium, and tungsten, all vital for American manufacturing and military technology. This control renders the U.S. susceptible to supply chain interruptions, even if resources are sourced from outside China, according to the International Energy Agency.

As of now, the DFC has invested over $14 billion in Africa, with more than $3 billion designated for critical minerals projects, as reported. They are contemplating further investments in rare earth ventures and a graphite mine in Mozambique, though they haven’t yet revealed which specific projects might receive new equity financing.

Mozambique is notable for being a key supplier of minerals pertinent to U.S. manufacturing, being a leading producer of graphite, titanium minerals, and zirconium, as outlined by the U.S. Geological Survey.

The DFC previously announced intentions to acquire a stake in Australian-owned Syrah Resources, which operates a substantial graphite mine in Mozambique. This operation, paired with a processing facility in Louisiana, creates a link between African mineral production and the U.S. supply chain.

Abigail Hunter, Executive Director of SAFE’s Center for Critical Minerals Strategy, pointed out that DFC’s support for the Balama graphite operation in Mozambique exemplifies such connections in the supply chain.

Additionally, the DFC is backing a $553 million project to rehabilitate a railway along the Lobito Corridor, facilitating transport between copper and cobalt mines in Zambia and the Democratic Republic of the Congo to Angola. This railway could serve as an alternative to Chinese-backed routes, providing companies a different way to export raw materials.

China has committed $1.4 billion to revive the Tanzania-Zambia Railway, a competing infrastructure corridor that connects mineral-rich regions to the Indian Ocean.

The investment highlights China’s ambition to extend its global influence via initiatives like the Belt and Road Initiative (BRI), aimed at enhancing trade networks and economic reach through various projects. The U.S. State Department has criticized such programs for their coercive lending tactics, indicating that they often leave developing nations with significant debt while expanding China’s power.

However, gaining access to African minerals does not necessarily mean the U.S. will reduce its reliance on China. Beijing controls more than 90% of global refining for several essential minerals, which suggests that even American-backed mines may need to send raw materials to China for processing, thus not changing the underlying supply chain vulnerabilities.

Ghildyal expressed that if minerals extracted from Africa still require processing in China, the U.S.’s dependence remains largely intact. The U.S. has also been promoting domestic rare earth recycling, with initiatives like a proposed $100 million project in Missouri to reclaim materials from old magnets and manufacturing waste.

While the DFC primarily relies on loans and guarantees, it plans to increase direct ownership investments over time, as noted by DFC Regional Managing Director for Africa, Vibhuti Jain. Recently, the DFC announced an investment of up to $155 million in WIOCC, an African digital infrastructure provider, marking its largest equity commitment to date.

Jain mentioned that as the DFC expands, more equity investments are likely, emphasizing that simply securing minerals isn’t enough. The real objective should be to develop industrial capabilities that transform these minerals into usable products for American manufacturers and the defense sector.