Minerals diplomacy can help repair US-SA relations

A real opportunity exists for SA to scale up US investments in manganese production and processing in the country

It’s hard to disagree with Justice Malala’s recent column in the Financial Mail, in which he said US ambassador Reuben Brigety is not well positioned to constructively work on improving relations between the two countries given his loss of credibility with the SA government (“Why the US ambassador must quit”, September 5).

But there’s also little reason for me to believe we need to hinge rebuilding the bilateral relationship on Brigety. Policymakers in Washington DC haven’t backed Brigety and have continuously signalled a real desire to rebuild relations. 

There are three things you should know about me: I’m American, I have spent most of working career in SA and deeply love the country, and I’m a mining economist. All of this shapes my view on what tools we can use to begin rebuilding relations. 

The US, and American companies in general, have had limited commercial engagement with SA’s mining sector. While the mining sector contributes roughly 8% of SA’s GDP, it is by far the biggest export and therefore a key source of revenue and foreign exchange for a country that’s cash-strapped.

SA has a commodity the US needs — manganese. In fact, SA sits on 70% of the world’s manganese. It is one of the only critical US imports that is not substitutable. In 2021 SA produced 37.5% of the world’s manganese, followed by Gabon at 18% and the US at 16.5%.

But the US’s import dynamics did not mirror global production trends. It imported $61.9m of its manganese (67%) from Gabon and $15.7m (18%) from SA. In other words, the US has relied disproportionately on Gabon for its manganese. 

Without manganese there is no steel. Iron is generally viewed as the major input for steel production but manganese, which sits next door on the periodic table, is also required because it removes oxygen and sulphur when iron ore is converted into iron, and is therefore a key alloy for converting iron into steel.

The coup in Gabon last week is likely to drive a rebalancing of global manganese sourcing. There’s a strong link between political stability and mining investments, and it’s hard to tell where nascent and uncertain governments will take the future of its policies and economy. Resource nationalism is an often used rebound policy.

The coup deposed President Ali Bongo Ondimba, who with the father he succeeded had spent a cumulative 50 years in power. Coup leader Gen Brice Oligui Nguema has already been sworn in as the interim president. A new government after 50 years will inherently usher in uncertainty. 

Gabon’s political instability threatens the development of its rich resource reserves. Unlike most other countries in the Sahel, Gabon’s resource reserves categorise it as a middle-income country despite a third of its 2.4-million population living below the poverty line.

Gabon has significant oil, manganese and timber reserves that have attracted substantial investment. But the recent transition to join other junta-led West African countries will probably see a pullback in engagement with the US, and possibly other Western countries.

There’s a recent precedent. Following the coup in Niger just weeks before the one in Gabon, US secretary of state Antony Blinken warned coup leaders that detaining the president would put hundreds of millions of dollars of assistance at risk. 

Instability is terrifying for mining firms — they commit tens of millions of dollars to projects that usually have a mine life ranging from 25 to 80 years. As a result, Gabon’s instability and governance uncertainty will likely translate to a reduction in greenfield and brownfield mining projects, including in the manganese sector.

It’s a tragedy for Gabon. What was one of the more stable countries in the region is now marked by deep uncertainty. But it’s a real opportunity for SA. Sure, we know there are governance challenges and sector-specific challenges, but we are many miles ahead of Gabon. There’s also ample evidence that SA wants to improve relations with the US. Consider recent visits by trade, industry & competition minister Ebrahim Patel and national security adviser Sydney Mufamadi. 

There’s a real opportunity to scale up US investments in manganese production and processing in SA. Demand for manganese will grow in the coming years, and SA and the US are well positioned to strengthen economic relations and trade ties between the two countries.