Editorial | Geopolitics of minerals | Commentary – Jamaica Gleaner

Jamaica knows more than a thing or two about the potential rewards, and the clear risks, of attempting, as Ludovic Subran, the chief economist at the global insurer Allianz SE, unfortunately, frames it, to erect “iron curtains” around strategic minerals.

In 1974, during Michael Manley’s administration, the island was the leading architect – along with Australia, Guinea, Guyana, Sierra Leone, and Yugoslavia – of the now defunct International Bauxite Association (IBA). Ghana, Haiti and the Dominican Republic subsequently joined the IBA.

At the time, Jamaica earned very little from its bauxite-alumina industry. It had hoped to extract more. Or as the matter was articulated by the IBA’s founders, they were “anxious to promote the orderly and rational management, including the processing and marketing, of the bauxite resources of producing countries”.

Developed countries saw in the IBA another, and dangerous, OPEC-style cartel. The multinational companies that mined bauxite and refined alumina in Jamaica, the most reform-minded of the IBA’s members, were concerned about losing their influence over, and control of, the industry. They responded in two ways: they explored and developed bauxite mines outside the IBA; and with the support of their home governments, they sought, with success, to split the IBA by investing more in those members that were less enthusiastic about introducing Jamaica-style production taxes.

Bauxite production fell in Jamaica. By the start of the 1980s, helped by a shift in global power, the IBA was effectively dead, just awaiting its last rites.

ACCELERATE RESEARCH

It is probable, too, that the existence of the IBA helped to accelerate research into the industrial applications of plastics and other materials as alternatives to aluminium. This point is relevant in the context of current technological advances and Mr Subran’s concerns about the global distribution of key minerals, as expressed in an article syndicated in this newspaper.

Like Mr Subran, The Gleaner is firmly against metals critical to modern industrial applications, but which are found in a few countries, being denied to some countries. Similarly, neither should products and technologies, for which some of these same minerals are vital, be ‘fenced in’ in pursuance of the economic containment of competitors or in furtherance of geopolitical contests.

As Mr Subran noted, many of the minerals that are critical to transitioning to a greener Earth and, therefore, in the fight against global warming and climate change, are concentrated in a few countries. For instance, China exports over 60 per cent of rare earth elements (REE) and has around 40 per cent of their known deposits. The Democratic Republic of Congo controls nearly two-thirds of the market for cobalt, and South Africa has around 70 per cent of the world’s platinum.

Notably, most of the countries with these so-called strategic minerals are in the Global South, the poorer parts of the world, which often lament their lack of access to, or the high price of, capital for financing their development or a global decision-making structure in which they have little influence and which is insufficiently responsive to their concerns.

Mr Subran worries that “if mineral-rich countries were to join forces, they could shake global markets in three ways, starting with price manipulation … which, in turn, would make clean-energy technologies more expensive, potentially slowing the green transition”. He sees the expansion of the BRICS group through this prism and of its possibility to promote “supply disruptions to gain geopolitical leverage over countries that are highly reliant on these metals”.

SOLUTION

Apart from employing more sustainable extraction methods and increased recycling, Mr Subran’s solution to the perceived problem is for developed economies of the West “to diversify supply relationships and to make more concrete investments abroad to prevent further concentration over the long term … (and) increasing the plurality of shareholders in dominant companies, whether public or private, by supporting conducive trade and foreign investment policies”.

These are perhaps all feasible solutions. But the proposals seem to make a presumption that developing countries with significant mineral reserves, who ask from new approaches to global relationships, are merely pawns to the will of the powerful, with little ambition for broader development. Calls for equity are perceived as shakedowns. In which case, Barbados’ Prime Minister Mia Mottley’s Bridgetown Initiative, with its call for a reform of the global financial system, is tantamount to an attempt at highway robbery.

Analyses of actions by raw-material exporters cannot be framed solely in the geopolitical or Great Power interests or ideological preferences. Neither can a discussion, direct or implied, of China’s imposition of import restrictions on gallium and germanium be divorced from Western bans on the export to China of semiconductor technology and chips utilising these materials, ostensibly on the grounds that the technology will support China’s security apparatus. Or simply not addressed at all.

Attempts by countries to get the best value for their resources do not make these countries either pro-Chinese or anti-West. Neither does insistence on reform in support of their development.

Perspectives to the contrary, whether on minerals or the global order or development finance, are stuck in the 1970s.