U.S probes critical minerals imports: assessing South Africa impact

The United States government has initiated an investigation into potential new tariffs on all U.S. critical mineral imports, aiming to evaluate America's vulnerabilities in processing these minerals and address concerns about market distortions caused by foreign actors. This probe comes at a time when Africa, known to hold around 30 percent of the world's critical mineral reserves, stands to be significantly affected by any changes in global trade dynamics. Critical minerals such as manganese, graphite, nickel, lithium, and copper are crucial for the green transition and electrification, making the implications of this investigation far-reaching. To shed light on what this probe could mean for the African continent, CNBC Africa spoke with Hugo Pienaar, Chief Economist of the Minerals Council of South Africa. Pienaar shared his insights on the potential impact on Africa's economy and industry if tariffs are imposed on critical mineral exports. Pienaar highlighted the backdrop against which the U.S. had initiated this probe, alluding to the ongoing trade tensions between the U.S. and China. The Chinese government had previously threatened to limit the export of rare earth minerals to the U.S. Rare earth minerals, including graphite essential for military applications, are part of the broader category of critical minerals. Given China's dominance in rare earth mineral production, the U.S. probe is seen by some as a strategic move targeting China, although it now encompasses critical minerals as a whole. In terms of the potential risks for Africa, Pienaar pointed out that key mineral-exporting countries on the continent like the Democratic Republic of Congo (DRC) and Zambia, which are major producers of cobalt, could face challenges if tariffs are imposed on their exports. With South Africa boasting 80 percent of the world's platinum group metal resources, classified as critical minerals, the imposition of tariffs could lead to increased costs for U.S. consumers, potentially dampening demand for these minerals. This, in turn, could have negative implications for African countries reliant on mineral exports, affecting both their economies as well as the U.S. industries dependent on these minerals. The imposition of tariffs on critical minerals could not only impact the African continent but also potentially harm the U.S. economy, given the limited availability of alternative sources for minerals like cobalt and platinum. If U.S. industries are unable to source these critical minerals from other regions, it could disrupt their operations and supply chains, leading to broader economic consequences. As the 90-day investigation period unfolds, stakeholders in Africa and around the world will be closely monitoring the outcomes and potential policy shifts that may result from this probe. The interconnected nature of the global critical minerals supply chain underscores the importance of considering the implications of trade policies on all parties involved. While the full extent of the impact remains to be seen, the U.S. probe on critical minerals imports is poised to have significant consequences for Africa's economy and industry.