The United States is shifting strategy to fund local African processing and mining infrastructure, after recognising it cannot yet process the critical minerals it is racing to secure from the continent to counter China.
Tom Haslett, managing director of policy for critical minerals at the US International Development Finance Corporation (DFC), said that unlike China, which had “significant industry backing for both processing and downstream manufacturing”, the US and Europe did not yet have that capacity.
Speaking in Nairobi last month, he argued that this deficit created “real opportunities for Africa” to develop local beneficiation. “We are not at the point where we say everything must go back to the US, because we cannot yet process it all,” Haslett added.
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This industrial bottleneck means the West currently lacks the capacity to process the very resources it is battling to secure. Washington is shifting its strategy towards favouring local processing in African nations, ramping up investments across the continent.
This is where another American agency, the US Trade and Development Agency (USTDA), comes in. It provides early-stage grant funding for feasibility studies, to de-risk projects before the DFC moves in to provide large-scale financing and political risk insurance.
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Chris Berry, head of commodity advisory firm House Mountain Partners, agreed that while the lack of processing capacity was widely acknowledged, “building scale at speed is something the US and EU governments are not accustomed to doing”. He said that to compete with China, the US must combine deep capital markets with permitting reform and allied collaboration.