At the close of 2022 the UK and SA made a series of pledges to “promote responsible exploration, development, production and processing of minerals in SA”.
The move came as both countries, hobbled by economic stagnation, looked to enter an increasingly profitable green energy market driven by the world’s race to zero emissions.
In post-Brexit Britain the UK government has the difficult task of figuring out how it can meet its own carbon targets and remain competitive in the green economy. The renewables and green tech racetrack is split in two.
On one side the US and EU are doling out unprecedented subsidies to spur innovation, and on the other is China’s complete dominance of the green energy supply chain, from cobalt mines in the Democratic Republic of Congo to its enormous refining and battery-making capability at home.
On a cursory analysis of its policy positions the UK seemingly wants to dabble in both markets. On the green energy and innovation track the government’s Powering Up Britain paper outlines a collective of policies that “will leverage £100bn of private investment over the period to 2030”.
Should Labour win the upcoming 2024 elections (as polls suggest) the administration will go further in combining green policy with industrial policy via a £28bn Green New Deal. Questions remain as to whether Labour will proceed with this plan in the face of a tough fiscal position. Nevertheless, even in a watered-down version the policy is significant.
Unfortunately for the UK, its policy interventions are dwarfed by the sheer scale of the US’s $300bn subsidy package for green industry as part of the Inflation Reduction Act. Like bees to honey, UK green tech darlings are drawn to the US market, flush with cash for companies in battery power, hydrogen, solar and everything in between.
Firms such as lithium ion battery producer AMTE Power and Tevva, a manufacturer of hydrogen- and battery-powered vehicles, are already looking to jump the Atlantic. Even European companies such as Norway’s Nel Hydrogen are making the move though the EU will introduce a slew of subsidies of its own in support of its Green Deal Industrial Plan for the net-zero age.
Perhaps then the UK should bet on supply chains, leveraging its legacy mining houses to ease a pathway into the green transition. Foreign secretary James Cleverly’s recent trip to Zambia, where the UK signed deals worth $3.7bn for investments in clean energy and critical minerals, made this strategy real.
Zambia boasts world-beating deposits of copper, cobalt, manganese and nickel. Here again though, the UK has been slower to the starting line than its competitors. Beijing’s foresight regarding the impending ditching of hydrocarbons saw a 21st century spending spree, which secured contracts across the continent for rare and critical minerals. Within two decades China now controls 90% of the rare earths market, from sourcing to processing.
The UK is likely to find itself outpaced in both lanes if it cannot secure trade deals suited to a new world order. In the 1990s and early 2000s individual states could enter a globalised market, taking full advantage of liberalised trade barriers. Post-Brexit Britain would have done well in such an environment. Alas, the world today is quite different. The global economic order is becoming fragmented through regionalisation.
If the UK is to compete and win in the green economy it needs to sign more agreements of the kind it did with SA. Doing so would allow late starters to ensure that the race to zero is not a zero sum game.
• Nott (@TheAfricaBrief) works for a venture facility for public benefit and is based in London. He writes in his personal capacity.
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