Finding purpose in BRICS: Expanding mineral markets in Africa and the Middle East

South Africa hosted the 2023 BRICS summit. Credit: Per-Anders Pettersson via Getty Images

As China moves away from trading critical minerals with the US due to political tensions, it moves closer to BRICS, the loose coalition of developing nations. The formation and expansion of BRICS would give members access to a wide range of mineral resources and potential processing facilities, reducing their dependence on the West.

The BRICS comprises a group of five major emerging countries: Brazil, Russia, India, China and South Africa. During its annual leaders’ summit in South Africa from 22-24 August, members of the BRICS group met to discuss energy, trade, and expansion of their horizons.

The bloc was founded informally in 2008 by Brazil, Russia, India and China after Goldman Sachs economist Jim O’Neill pointed out the growth potential of the four countries in a research paper. The BRICS group of countries now account for 36% of the world's GDP and 42% of the world's population. The economic bloc was initially established as an alternative to the US-led international order to provide emerging economies in the Global South with a counterbalance to Western institutions.

Over 40 countries have since expressed interest in participating in the forum, including Iran, Saudi Arabia, the United Arab Emirates, Argentina, Indonesia, Egypt, Ethiopia, and Kazakhstan.

As countries expressed interest in joining a group they think can “level the playing field” in the world, BRICS leaders left the door open to future growth by opting to favour the bloc's first expansion in 13 years.

The BRICS group of countries decided to admit Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the United Arab Emirates starting in January 2024, in an effort to hasten the process of changing what they view as an outdated global order. 

In his address before the summit, President Cyril Ramaphosa said: "South Africa has always championed the interests of Africa within BRICS.

“There are great opportunities [for the bloc] to participate in the African Continental Free Trade Area by locating production and services in various countries on the African continent, including our own, by partnering with local companies and entrepreneurs,” he said.

In a social media video shared by digital media organisation African Stream, Ramaphosa said they “no longer want to be exporting ore, soil, dust and rocks from the minerals of our continent,” but want to export finished products that have value.

At the meeting, energy ministers committed to exchanging best practices and standards regarding the development and beneficiation of minerals in the country of origin. Delegates also agreed to explore technologies for their energy transitions and carbon reduction.

The African continent is a rich home to gold, chromium, titanium, platinum, cobalt, zinc, copper, oil and natural gas. Governments have recently restricted or banned mineral exports to boost processing and retain profits from the end products.

"We want to build a partnership between BRICS and Africa so that our continent can unlock opportunities for increased trade, investment and infrastructure development,” Ramaphosa added.

Nigeria, one of Africa’s powerhouses, reportedly did not attend the BRICS summit, wherein they were invited to apply for membership. Due to administrative struggles, the Foreign Minister of Nigeria did not submit the country’s application on time.

Mashego Dlamini, Deputy Minister of Nigeria’s Department of International Relations and Cooperation, said: “It was because of the change of government in Nigeria that the application was delayed. But there is still an opportunity to apply.”

There were rumours that South Africa blocked Nigeria’s membership, but Nigeria’s High commissioner in South Africa has not confirmed whether the Nigerian government prepared an application for membership of BRICS.

Although the consensus-based strategy of BRICS has limited its efficacy in the past, the geopolitical forces promoting its growth and its members' occasionally divergent strategic objectives will likely play a significant role in determining the future of the international order.

However, due to the ongoing geopolitical tensions between the US and China, the US and Saudi Arabia have discussed their own deals to secure metals from African countries. This would reduce China’s dominance in the electric vehicle (EV) supply chain, the Wall Street Journal reported.

Saudi Arabia seeks to buy $15bn (SR56.25bn) worth of mining assets in African countries, such as the Democratic Republic of Congo, Guinea and Namibia. This would boost the US’ attempt to curb China’s role in the global race for cobalt, lithium and other metals processed into batteries used in electric cars, laptops and smartphones.

In 2022, global battery demand for clean energy applications increased by two-thirds, with energy storage accounting for a growing total demand. As the average battery size for electric cars continues to increase, demand for batteries for automobiles has surpassed the growth rate of electric car sales. The EV industry has started to follow the conventional car markets' push toward larger vehicles, putting further strain on critical mineral supply chains.

China accounts for 98% of global raw gallium production and 67% of raw germanium production, as per the data from the US Geological Survey. According to non-profit think tank the Center for Strategic and International Studies, most of China’s output goes towards its domestic consumption, and the country does not have a “monopoly on the global supply chain for these minerals”.

According to the Wall Street Journal, Saudi Arabia is also interested in securing stakes in resources instead of buying and operating the assets, making the country a “lucrative investor” for African countries. Including the country in BRICS would help facilitate these deals, and keep their power in-house. However, one research fellow at a South African think tank the Institute for Global Dialogue told Al Jazeera that the introduction of four news Middle Eastern countries into BRICS, including Saudi Arabia, “could invite the argument that the block is very Middle East centric”.

The expansion announcement was likely the most important declaration at the BRICS summit. It is said to be a significant move that will “test the diplomatic capabilities of South Africa”, and place more purpose in the otherwise loose coalition of countries. This allows other BRICS members to participate in the African Continental Free Trade Area.

Christopher Weafer, CEO of business consultancy Macro-Advisory, said: “The sanctions against Russia and China over the last 18 months have acted as a catalyst. The grouping has been around for many years, but hasn’t progressed into anything effective or coordinated.” Now, leaders speak enthusiastically about “de-dollarisation” and the recentring of global financial systems, massive projects that would lie far in the future of the present organisation.

According to the International Energy Agency, the energy transition minerals market doubled over the last five years, reaching $320bn in 2022. This is roughly comparable to the market for iron ore mining, driven by increased demand and high costs. Compared with the slow rise of bulk materials like zinc and lead, transition metals demand has grown rapidly.  

This opens up new business prospects for the sector, generates employment for the population, and, in some circumstances, aids in the diversification of coal-dependent economies.