China and Russia seek to control Africa's critical resources through investment

For what strategic purposes are China and Russia investing multibillion-dollar investments in African countries and what resources are of primary interest to them?

Large states have many tools to spread their influence around the world: from culture and food, educational and scientific exchange to loans and foreign direct investment (FDI).

In dictatorships like Russia or China, such initiatives are rarely private. Most often, these are coordinated policies that are implemented with a long-term goal: to gain control over critical resources or to create leverage over other countries.

One striking example is Russia’s use of energy and food as weapons. The situation may be less clear in other sectors. What are the strategic goals of China and Russia's multi-billion dollar investments in Africa?

Leap of Asian tigers to Africa?

There are two views on foreign direct investment: from the point of view of their supplier and recipient. From an investor's perspective, the share of Chinese and Russian FDI that went to Africa was relatively small.

In 2003-2021, China invested almost $51 billion in African countries, Russia - $1.7 billion. This is only 1.6% of China's total FDI in 2021 and less than 0.5% of Russia in any year. However, these relatively inexpensive financial injections have a disproportionate political impact.

From the perspective of the recipient of investments (individual African countries), China is a disproportionate source of capital flows. For example, in Eritrea, Kenya, Zambia or Zimbabwe, China accounts for about 20% of all FDI.

South Africa and the Democratic Republic of Congo are the main recipients of Chinese foreign direct investment (12% and 10% of the total in Africa, respectively) due to their significant mineral reserves (lithium and uranium).

These resources are critical for the energy transition and technological development. China's increasing dominance over these resources could change global energy dynamics and strengthen its negotiating position in the world.

Beijing's strategy demonstrates its desire to become the centerpiece of Africa's economic structure. According to the China Africa Research Initiative, China invests predominantly in construction and mining and to a lesser extent in manufacturing and other sectors.

Significant mining investments could indicate China is focusing on gaining access to critical raw materials, including lithium and uranium. The persistent investment in these industries indicates the PRC's strategic desire to benefit from Africa's rich resource base and perhaps secure supply chains for its own industries in the long term.

Chinese investment in lithium, a key component for the green energy sector, has been particularly aggressive, with Chinese miners and battery makers investing $4.5 billion in lithium mines over the past two years and leading many African lithium projects in Namibia, Zimbabwe and Mali.

Beijing is on track to have the lion's share of the world's lithium mining capacity by 2025 and potentially control a third of its output. Combined with a significant share of cobalt production (China Moly, Zijin Mining and others control 30% of copper and 50% of cobalt production in Africa) this puts China in an advantageous position to influence global supply chains.

Although China's control over African mineral production as a whole accounts for less than 7% of the total value of African mining, its influence in the mentioned sectors is particularly strong.

The potential threats to China's control over lithium, copper and cobalt mining are multidimensional. China's economic dominance in these industries can lead to a situation of dependency in which African countries lose leverage in negotiating fair terms, as seen in Congo's attempts to renegotiate infrastructure development agreements with Beijing in exchange for minerals.

From a political perspective, increasing dependence on Chinese investment could lead to a scenario in which Chinese interests significantly influence policy-making in these African countries. Moreover, environmental and safety standards at Chinese-owned mining operations are often overshadowed.

The lack of strict regulations and oversight can lead to environmental degradation and poor working conditions, which compromise ethical issues and raise sustainability concerns.

As China tightens control over the extraction and processing of critical minerals, calls for supply chain diversification are growing louder. The international community, especially Western countries, is seeking to forge a critical mineral supply chain free of Beijing's influence. However, China's advantage in infrastructure development and financing activities in Africa poses a serious challenge.

Russia's approach

Russian FDI in Africa is strategically selective and relatively small, but significant in terms of geopolitical influence. Their main destinations, judging by the limited data from the Central Bank of the Russian Federation, are Congo, Zimbabwe and Angola.

The 2023 Russia-Africa summit underscored Moscow's desire to expand its economic presence, focusing on agriculture, mining and energy, with the goal of doubling trade by 2030. However, actual FDI from Russia is less than 1% of the total in Africa.

Russia and its enterprises - Rosatom in the energy sector and Rusal in the mining industry - are involved in projects that, although not large-scale in terms of investment, have significant political and strategic weight.

These projects often involve critical resources. First of all, we are talking about uranium, which is key for nuclear energy and can allow the Russian Federation to gain significant control over these resources. For example, Rosatom is actively increasing its uranium reserves, including through the acquisition of a project in Tanzania for $1.15 billion.

Russian control over uranium concerns not only raw materials, but the entire nuclear fuel cycle. Although Russia is a relatively small producer of “raw” uranium, it owns a significant share of the world’s processing and enrichment infrastructure—about 40% and 46%, respectively. These capabilities are critical because they allow raw uranium to be processed into fuel for nuclear reactors.

In addition, Russia dominates the export of nuclear power plants. In 2012-2021, it initiated the construction of 19 nuclear reactors, 15 of them abroad. This is much more than any other country over the same period.

Russian control of nuclear reactor technology creates dependency for countries that use this technology. Such dependence could extend to African countries if they decide to use Russian nuclear technology, and would have wider consequences if Moscow controls significant uranium resources on the continent.

The Russian Federation is also the main supplier of weapons to Africa, controlling half of the market. This dominance, coupled with the involvement of asymmetric instruments such as private military companies, strengthens its influence on the continent.

Although Russia's economic presence in Africa is not as extensive as China's, its role in supplying strategic goods and military equipment to African countries is a multifaceted challenge. If Russia were to gain control of critical resources like lithium or uranium, it could create dependencies, influence market prices, and use them for political influence—something that is happening in other regions.

The potential risks of such activities are enormous. Control of critical resources by a foreign state, especially an aggressive one, affects the sovereignty of countries and creates a strategic challenge on a global scale, since these resources are critical to the green energy transition and technological development around the world.

Instead of output

The chessboard of African resources is dynamic, and every move by Russia and China could change the balance of global power. The results of this geopolitical game will be felt beyond the African continent, outlining the contours of international relations for many years to come. The actions of the Russian Federation and the People's Republic of China in Africa require attention and a strategic response that will support sustainable and equitable development.