ANTHONY BUTLER: It’s resources that will determine Brics membership

Chances are that Saudi Arabia and Indonesia will qualify as major producers of oil and nickel, respectively

First published in Business Day and BusinessLive

 18 AUGUST 2023

SA’s many inveterate gamblers have been placing bets on potential new members of the Brics (Brazil, Russia, India, China and SA) group of countries ahead of the formation’s 15th summit, which begins in Sandton on Tuesday.  

Given that the task of formulating the entry criteria has fallen to SA’s department of international relations & co-operation, some of the clever money is on absolutely nothing being decided at all. 

There is also speculation about a two-tier model in which “associate horses” will be asked to canter aimlessly around the track for years before full membership is bestowed on them. 

With upwards of 20 runners and riders in the race, this columnist wagered in April that Indonesia and Saudi Arabia would be the lucky winners. Their de-dollarisation fantasies are aligned with Beijing’s hopes and dreams. Moreover, most Brics members want a majority Muslim state in the fold. 

We can also learn from the only previous case of expansion, when SA was admitted in 2010. This event was puzzling given SA’s relatively small population and economy. International relations scholars’ invocations of geographic diversity or a broad ideal of global collaboration have always seemed implausible. 

One alternative explanation may be the ANC’s determination to splash out R1-trillion on a nuclear power generation plant. Since one ANC faction supported a Franco-Chinese deal and another wanted to get into bed with the Kremlin, this could help explain the simultaneous benevolence of two member states.  

But SA’s invitation to join is better illuminated by the trusty aphorism, “It’s the resources, stupid!” Back in the early 2000s a predicted catalytic converter boom prioritised access to platinum group metals (PGMs), which were mostly dug up in the Bushveld or Russia’s Norilsk-Talnakh region. It was rumoured that President Vladimir Putin, inspired by Opec, wanted to bring SA into Brics and use the resulting platinum monopoly to “stick it to the man”. 

The Chinese were also focused on resources. In October 2007 the largely state-owned Industrial & Commercial Bank of China (ICBC) bought a 20% stake in SA’s Standard Bank for $5.5bn. The ICBC’s chair lauded the SA bank’s ability to facilitate cross-border financial services across the entire resource-rich continent. Throw in some more banks, SA’s mine logistics and security companies, and SA’s continental political influence at the time, and the rationale for Brics entry becomes clearer. 

Resources still influence how China and Russia view an ideal Brics partner. The Russia-Ukraine war has confirmed that the strategic importance of fossil fuels has far from dissipated. Today though, the hot resources are critical minerals required for mineral-intensive clean energy technologies, with copper, lithium, nickel, cobalt, graphite, manganese and rare-earth elements at the top of the shopping list. Currently available reserves are geographically concentrated, posing dangers of high and volatile prices, physical disruptions and trade restrictions during episodes of geopolitical instability. 

Despite a steady refrain from Washington and Brussels that China is dominant, mineral-linked energy insecurity is everybody’s problem — close US allies such as Australia and Chile dominate lithium extraction. Moreover, the US and EU have established significant initiatives to expand access, develop processing capacity and build supply chain resilience. 

Technology and policy uncertainty bedevil efforts to predict demand trajectories for critical minerals. And nobody, anywhere, has a clear plan for how, for example, to secure the near 70% of global cobalt production that takes place in the Democratic Republic of Congo. 

But when a major fossil fuel economy with a big bank balance and the producer of a third of global nickel output are both in the queue to join your club, this is certainly no handicap to their membership applications. That is wh y my money is still on Saudi Arabia and Indonesia. 

• Butler teaches public policy at the University of Cape Town.