André Brotto
The BRICS economic grouping of Brazil, Russia, India, China, and South Africa are sitting in the catbird seat as the world’s wealthiest nations spend billions of dollars to transition their economies away from fossil fuels. That’s because BRICS members occupy the dominant position in both the production and availability of critical raw minerals needed to produce clean energy goods like electric vehicles and solar panels. Brazil and China, for example, host the world’s largest reserves of natural graphite, which is used to manufacture electric batteries.
This year, the addition of five new BRICS members – including resource-rich nations like Egypt and Saudi Arabia – will solidify the group’s position as a critical player in the global race to mitigate the effects of climate change.
Here’s a look at how the growing global demand for renewable energy goods provides a strategic advantage for resource-abundant countries in the BRICS+ grouping.
What role are BRICS members playing in the climate transition?
Today, China is the world’s top producer of 16 minerals and elements that the US government deems to be “critical.” Currently, China accounts for 60% of all global production of lithium and cobalt, which are used in electric batteries. In addition, China is a dominant producer of yttrium, gallium, magnesium, tungsten, and bismuth. Other BRICS members boast deep reserves of rare earth minerals, including:
Brazil, which produces 10% of the world’s graphite – a key component in lithium-ion batteries.
South Africa and Russia, which collectively produce 83% of the world’s platinum used in next-generation batteries.
India, which is a major producer of rare earth elements like barite, chromium, and titanium.
Who are the new BRICS+ members and how will their inclusion affect trade in CRMs?
In January 2024, BRICS members agreed to include five new participants – Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. The addition of these members will further augment the group’s dominance of the global CRM marketplace.
That’s because the so-called BRICS+ group is home to 72% of the world’s rare earths, according to the Washington DC-based Center for Strategic and International Studies. The new bloc accounts for 75% of the world’s manganese, 50% of the world’s graphite, 28% of the world’s nickel, and 10% of the world’s copper (excluding Iran’s reserves).
Going forward, BRICS+ members – like Saudi Arabia and the United Arab Emirates – are actively expanding their exploration of other CRMs like gold, copper, and nickel. Iran, for example, says it recently discovered a massive lithium deposit, which is necessary for producing electric batteries. Meanwhile, Egypt has located huge reserves of phosphate rock, which is a key ingredient in lithium-ion batteries.
Which nations are buying CRMs from the BRICS?
Members of the Group of Seven economies represent 57% of the global demand for CRMs produced by BRICS nations. Over the past half-decade, G7 economies – which include Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States – have signed 40 accords with countries that supply CRMs, according to data collected by the Global Trade Alert. The European Union is a particularly active trade partner with 14 such agreements.
Are BRICS nations restricting trade in CRMs?
Yes. BRICS countries have already introduced different restrictions, ranging from export taxes to outright bans and the non-automatic allocation of licenses to companies.
For example, in 2022 South Africa banned the exports of certain metals. Last year, China banned the export of natural graphite in the name of protecting national security. Meanwhile, Russia has imposed CRM export licensing schemes on several key markets.
Rising G7 demand for CRMs means these nations are disproportionately affected by BRICS export restrictions, particularly for highly concentrated CRMs, such as rare earths in China or natural graphite in Brazil.
What are the implications for executives?
As firms seek to secure essential inputs to produce green energy goods, they can face significant challenges due to the geographical concentration of some markets. Geopolitics and other evolving global dynamics underscore the importance of risk management and contingency planning. Executives would be well advised to monitor geopolitical developments and trade policies that may impact resource availability. In addition, executives should continue to engage with BRICS+ policymakers to build support for favorable trade policies and support for CRM supply chains.
André Brotto is a Research Economist at the St. Gallen Endowment. He conducts research on international trade liberalisation and trade policy as well as its interactions with the financial and labour markets.
Institute for Management Development
