EU Commission thinks about Africa in EU drive for raw materials

EUobserver Europe’s development policy and external lending practices should play a greater role in securing raw materials from key producer regions such as Africa, the European Commission is set to propose in a new policy paper on Wednesday (2 February).

The communication will also look at measures to tackle growing fluctuations in global commodity markets, an issue that French President Nicolas Sarkozy has made a cornerstone of France’s G20 presidency.

Chinese restrictions on rare-earth minerals last year highlighted the need to secure better EU access to certain raw materials, with the commission identifying 14 as “critical” due to their potential supply risk, including graphite, tantalum, and magnesium.

While stressing that private companies are primarily responsible for securing their input needs, the commission’s paper will highlight the importance of higher EU recycling rates, together with efforts to tackle international trade distortions.

Helping Africa ramp up its production is also seen as a top policy priority. “Many developing countries – especially in Africa – have not been able to translate their resource wealth into sustainable and inclusive growth,” says a recent draft of the communication, seen by EUobserver.

“Development policies can play a crucial role in creating win-win situations where both developed and developing countries benefit from the sustainable supply of raw materials,” continues the draft, due to be adopted by the college of commissioners on Wednesday and therefore still subject to changes.

A forthcoming commission Green Paper consultation processes on the future of EU development policy and budget support will develop these ideas further.

It is clear however that EU financing for Africa’s extractive industry will play an important role.

“Resource-rich developing countries often suffer from a lack of transport, energy and environmental infrastructure which limits their ability to harness their mineral wealth,” Wednesday’s document is set to say.

“The European Commission and European Investment Bank (EIB), in co-operation with African countries, will continue to assess how to promote the most appropriate infrastructure, and related governance issues, that can contribute to the sustainable use of the resources of these countries and facilitate raw materials supply.”

Commodity markets

The paper will also tackle the issue of commodity-market volatility, with strong swings seen in prices for energy, metals, minerals and agricultural products in recent years. A spike in food prices in 2008 resulted in riots in Haiti and parts of Asia, and has also been linked to recent tension in northern Africa.

Suggestions that the commission would fail to draw a link between commodity prices and market speculation caused French President Nicolas Sarkozy to lash out last week, just days before the commission’s communication was set to be published.

“I will recommend a date for the publication of a study showing that speculation does not result in global price rises of raw materials: the 1 April,” Mr Sarkozy said ironically, referring to April Fool’s day.

A subsequent draft appears to make a connection between the two issues, but cautions that the exact nature of their relationship is still unclear.

“While there is a strong correlation between positions on derivative markets and spot prices, there is no conclusive evidence on the causality between speculation in derivatives markets and increased volatility and price increases in the underlying physical markets,” it says.

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