KEY TAKEAWAYS
KEY TAKEAWAYS
Demand for critical minerals is expected to skyrocket in the decades ahead. These minerals — such as copper, cobalt and lithium, among others — power the electronics we use every day and are essential for transitioning to greener energy technologies. The U.S. is increasingly working with African partners to develop the continent’s abundant critical minerals, an effort that is vital to advancing U.S. economic and national security interests. It also will have major implications for African countries: How these critical minerals are developed will significantly impact the continent’s economic future and beyond, even affecting peace and stability. This increasing U.S. policy focus comes against the backdrop of intensifying U.S. geopolitical competition with China, which dominates many African mining sectors.
The Lobito Corridor project is the flagship U.S. effort in the important but challenging critical minerals sector. The project’s performance in promoting mutually beneficial critical mineral partnerships will shape U.S. engagement in the region for the years ahead.
The Lobito Corridor project is an infrastructure initiative traversing Angola, the Democratic Republic of Congo (DRC) and Zambia, connecting the Copper Belt of the latter two countries with the Angolan Atlantic Ocean port of Lobito. While focused on the rehabilitation and construction of rail, the project also includes road, water and digital infrastructure. Copper from DRC and Zambia will be shipped from Lobito for global export.
A U.S. and European-backed initiative launched in collaboration with the three countries in 2023 as a “strategic economic corridor,” the project promises to cut transportation times, reduce the slow and environmentally damaging trucking of critical minerals, and spark economic development.
“It’s a project that’s about — far from just laying tracks. It’s about creating jobs, increasing trade, strengthening supply chains, boosting connectivity … for people across multiple countries. This is a game-changing regional investment,” U.S. President Joe Biden said last year. This multi-billion-dollar initiative has raised expectations of meaningful U.S. engagement among African partners in the region and even throughout the continent.
The Lobito Corridor project represents a different approach to U.S. engagement in Africa. Traditionally, U.S. development efforts on the continent have focused on health, agriculture, governance and other areas. Apart from some Millennium Challenge Corporation projects, the U.S. has not supported African infrastructure construction. The Lobito Corridor project is “the most significant transport infrastructure that the U.S. has helped develop on the African continent in a generation,” noted a U.S. State Department press release. U.S. support is expected to include over $550 million in U.S. International Development Finance Corporation (DFC) lending to rehabilitate the Angolan rail section.
Comparisons are often drawn between this project and China’s ambitious Belt and Road Initiative (BRI), launched in 2013. Both focus on Africa’s critical minerals. But the BRI and previous Chinese efforts have lent tens of billions of dollars — typically from Chinese state-owned banks — to African governments to finance Chinese-built infrastructure. While the Lobito Corridor project involves development finance, it is largely private sector-driven and multinational.
The Benguela railway section in Angola will be managed for 30 years by a consortium (Lobito Atlantic Railway) including Singapore-based commodities giant Trafigura, Portuguese construction company Mota-Engil, and Brussels-based private railway operator Vecturis, which together plan to invest $555 million in Angolan and Congolese operations. This consortium won the contract over a Chinese proposal, reflecting some dissatisfaction by Lobito countries over their engagement with China, including complaints over the quality and sustainability of its previous work on the Benguela railway.
While all three countries will continue to do business with China, they welcome having more options, it’s commonly heard, including American and European private-sector partners and their different approaches to developing and operating infrastructure.
The Lobito Corridor project has many challenges to overcome. Perhaps foremost, it must prove to be commercially viable, moving enough cargo to justify its considerable construction, operation and maintenance costs. The economics can be tricky, as the global prices of critical minerals are volatile, often stressing producers and their infrastructure providers. Further, African government moves to ban raw commodity exports — with the intention of increasing value-added mineral processing in Africa — could depress rail tonnage amid a lack of local processing capacity.
The Lobito Corridor also faces regional competition for moving critical minerals. The corridor will need to spark local economic activity, especially in agriculture, to win local community buy-in and increase rail traffic. The three participating governments will have to stay in sync on rail operations and priorities amid changing economic and political dynamics. Indeed, rail access can be a politically contentious issue. The project faces safety and operational challenges. And community impact issues will have to be managed, especially in Zambia, where rail construction is starting from scratch, requiring potential population displacement and environmental mitigation.
The U.S. can work to address some of the above risks. At present, few U.S. mining and related companies are active in Africa. The DFC and other agencies could prioritize supporting U.S. commercial activity that would take advantage of the corridor. USIP’s recently-released senior study group on critical minerals in Africa recommended such support, including more vigorous commercial diplomacy, and that the U.S. communicate to African governments the possible downsides of mining export bans. While the U.S. and Africans have a common interest in more value-added mineral processing in Africa, there is a danger of stringent requirements deterring foreign investment in a globally competitive industry.
The U.S. Agency for International Development (USAID) recently announced a $5 million agriculture project in Angola to increase economic activity able to utilize the corridor. U.S. diplomacy should prioritize maintaining political momentum for this project among the participating countries. And USAID has a role to play in addressing local community concerns over corridor access, disruptions and other potential tensions that come with development. Through this project, the U.S. has raised regional expectations for its constructive engagement. Sustained U.S. focus will give it the greatest chance of success.
The Lobito Corridor and its U.S.-support has historical significance. During the Cold War, the U.S. armed the UNITA rebel group as it fought against the Soviet- and Cuban-backed Marxist government during the decades-long Angolan civil war. That conflict cost some 750,000 Angolan lives and devastated infrastructure, including the Benguela Railway, which transported minerals under Portuguese colonial rule.
Today, while not without challenges, Angola is at peace and its relations with Washington are at an all-time high, with President João Lourenço visiting the White House last year. U.S. policy should continue to embrace Angola’s exceptional progress, as it has with the Lobito Corridor project and other bilateral initiatives. U.S. relations with the DRC and Zambia are similarly improving, in part because of this project.
The developing worldwide rush for critical minerals in Africa poses great opportunities for Africa development, but also many risks. The history of natural resource development on the continent provides many discouraging tales. Too often, the exploitation of oil, natural gas, diamonds, timber and other natural resources has fueled grand corruption, environmental destruction and violent conflict. USIP’s senior study group noted however that Africa’s critical minerals will be developed. But the question is how?
The senior study group concluded that it is best to have the U.S. government and U.S. companies active in Africa, offering responsible and transparent business practices. The report makes dozens of recommendations on how to build and expand U.S.-Africa critical mineral partnerships along these lines. Here, the Lobito Corridor project is an important model.
The development of the minerals sector is not only an economic imperative, but also essential for promoting peace and security in Africa.
The report also highlights the importance of promoting peace, security and economic development as part of the effort to develop the continent’s critical minerals. Enhancing security and governance and sharing economic benefits with local communities can help to address the root causes of conflict and instability in Africa. As the U.S. and African partners develop the critical minerals sector, investing in initiatives that create jobs, reduce poverty, provide essential services and promote good governance is crucial for sustainable peace and prosperity on the continent. The development of the minerals sector is not only an economic imperative, but also essential for promoting peace and security.
Indeed, the stakes are high. Critical minerals are essential for everything from defense applications to the processors in our phones and computers. U.S. economic and national security depend on diversifying supply chains for these important materials. Yet, China has been building infrastructure and securing critical mineral concessions throughout the African continent for over two decades while the U.S. has mainly watched. It’s not easy for U.S. companies to compete in this environment. If the U.S. wants to succeed in the African critical minerals sector — offering Africans the economic partnership and development options they want and helping to diversify U.S. supply chains to strengthen U.S. economic and national security — it should vigorously support U.S. and Western companies, including with infrastructure and other backing, as exemplified by the Lobito Corridor project.