Western countries are directing their development finance and export credit agencies to work with the private sector to support critical mining projects in a bid to break China’s dominance of a sector vital to high-tech industries.
The Financial Times (FT) reports that the Minerals Security Partnership (MSP), a group of 14 countries and the European Commission seeking to increase international cooperation and pledge financial support for a giant nickel project in Tanzania backed by mining monopoly BHP, will unveil a new financing network at an event in New York today (23 September).
MSP member countries are: Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, the Republic of Korea, Norway, Sweden, the United Kingdom, the United States and the European Commission.
In a joint statement to be released during the UN General Assembly, the network will “strengthen cooperation, promote information sharing and co-financing”.
Companies such as BlackRock and Goldman will also attend the meeting
The statement lists 10 critical mining projects that have already received support from MSP partner governments.
The meeting, which will be attended by representatives from BlackRock, Goldman Sachs, Citigroup, Rio Tinto and Anglo American, is part of an effort to encourage private investors and mining companies to invest more in the sector.
Jose Fernandez, US undersecretary of state for economic growth, said another 30 critical mineral mining projects were being evaluated by the MSP at a time when Western governments are racing to secure the raw materials needed to produce everything from electric cars to advanced weapons.
Washington accuses Beijing of ‘overproduction and predatory pricing’
What China is doing is following the monopolist’s playbook to eliminate competition,’ Fernandez claimed, accusing Beijing of ‘overproduction and predatory pricing’ to maintain its grip on the global supply of critical minerals.
We recognise that we cannot solve this problem with one country, we are stronger together,’ Fernandez said in an interview with the FT.
Chinese companies control 90 per cent of the world’s rare earth processing capacity and more than half of the processing capacity for cobalt, nickel and lithium minerals used to make batteries for electric vehicles.
The aim is to wean low-income countries off China
“They’ve had the only game in town; we’re changing that,” said Abigail Hunter, executive director of the SAFE Center for Critical Minerals Strategy, an NGO working with the US State Department to promote investment in the critical minerals supply chain.
The goal is to “provide an alternative to China in terms of financing, especially for low-income countries,” says Hunter.
The US Development Finance Corporation (DFC) will issue a letter of intent to provide debt financing for a mining project in Tanzania that will loosen China’s and Indonesia’s control over the supply of nickel, a key battery component.
The Kabanga nickel project is being developed by Lifezone Metals, an Isle of Man-based company 17 per cent owned by BHP.
The project is a challenge to the Chinese-backed investment that has reshaped the nickel market in Indonesia, giving the country a virtual monopoly and increasing its share of global production to 55 per cent from 16 per cent in 2017.
Call for more space for public-private partnerships
“The DFC declined to say how much it would lend to the project. Our main focus is to ensure that the private sector gets its fair share and has the necessary tools to provide the financing and investment to stimulate growth in this sector,” said DFC chief executive Scott Nathan.
Private investors believe that increased demand for the commodities needed to drive the energy transition will create a profitable and more stable market.
But they say more support and public-private collaboration is needed to attract more capital. Dominic Raab, former UK deputy prime minister and head of global affairs at Appian Capital Advisory, a major investor in critical minerals, said: “Investors wouldn’t look at these businesses if it weren’t for the potential returns, but that’s difficult. The question is whether we can put the needle in ourselves. I think we are starting to put the bones of a plan together, but we don’t have the scale yet and we need to show staying power,” he said.
