Scramble for rare earths heralds opportunities for SA and Africa

23 June 2025

Business Day

by Ayabonga Cawe 

As expected, when EU and Chinese trade leaders met in early June for talks the discussion centred on trade in “high tech products” between the two parties. The Paris meeting, held a few weeks ago, was called to discuss pricing commitments by Chinese electric vehicle (EV) exporters as an “alternative remedy” arising from an anti-subsidy probe initiated by Brussels. It would not have been lost on Brussels that in May China saw an 80.9% year-on-year surge in EV exports.

China exported 200,000 EV units in May (more than two fifths of all Chinese car exports), with BYD accounting for nearly 85,000 of these. Tesla exported about 23,000 units. These vehicles went not only to Europe but to other markets as well, including — on a relatively small scale — SA. New energy vehicle sales grew from just more than 300 units in 2020 to more than 15,000 by the end of last year, with plug-in hybrids accounting for 87% of total sales in 2024. This puts into context the growing supply dominance of China in this product market.

As the world market for EVs has expanded so too have concerns over the security of supply of materials crucial to making them, such as rare earths and graphite. In April China imposed export controls, requiring a licence from Chinese customs authorities before export. This move has elicited great interest and comment, primarily because of the vulnerability of European and American electric car and military supply chains to the Chinese near-total dominance over the global supply of rare earth materials.

Rare earths are used in EVs, wind turbines, laser technology and medical imaging. They are also used for numerous military applications, including radar systems, missiles and other defence technology. This dual-use character is what the Chinese say justifies the export controls, which followed similar measures by the US regarding AI microchips and ethane exported to China.

These developments highlight two main features:

• Any settlement reached in talks between Beijing, Washington, Brussels and the UK will occur in a context where trade deals increasingly also cover military and security concerns. The rearmament of Europe and the fighting talk in the chair’s summary text from the Group of Seven meeting in Kananaskis last week signal the importance of access to dual-use materials in any deals.
   
• Auto-industrial policy and its success may soon be determined by proximity to processing and battery assembly activities that are crucial to value distribution in the new energy vehicle market — and access (by licence or other means) to intellectual property (IP) and proprietary technology.

This is why last month the International Trade Administration Commission (ITAC) included rare earths and other materials in a notice regarding amendments to standard materials benefiting under the automotive production & development programme. Without the knowledge ingredients and capital investment, the diversification opportunity for military and industrial users of the materials we have in our neighbourhood may be all but lost.

The techno-economic rivalry that is under way requires the diversification of supply chains in response to critical interdependencies for raw materials. Its success and use in industrial applications may herald wide opportunities for SA and Africa. The continent is expected to contribute as much as a tenth of the world’s supply of rare earths by 2030, according to research firm Benchmark Mineral Intelligence.

Policy development processes such as the draft notice on standard materials, the draft critical minerals strategy and other measures, along with multilateral advocacy in our presidency of the Group of 20 for processing critical minerals close to source, and special and differentiated expectations of technology and IP transfer, all need to be harnessed towards realisation of the promise of these changes.

• Cawe is a Chief Commissioner at ITAC. He writes in his personal capacity.