The BRICS+: economic alliance or future private club of raw materials?

From the acronym BRIC, coined in 2001 by econ­o­mist Jim O’Neill to describe the eco­nom­ic poten­tial of Brazil, Rus­sia, India and Chi­na, to its evo­lu­tion into BRICS with the addi­tion of South Africa in 2011, and then to its recent trans­for­ma­tion into BRICS+ in August 2023, the group has come a long way! This group, which is high­ly het­ero­ge­neous in eco­nom­ic terms (growth dynam­ics, demo­graph­ics, lev­el of indus­tri­al­i­sa­tion, sec­toral spe­cial­i­sa­tion, etc.), has above all demon­strat­ed its abil­i­ty to forge clos­er polit­i­cal ties and this shared (but also com­pet­ing) desire to become glob­al powers.

The evo­lu­tion of the BRICS into BRICS+, with the addi­tion of Sau­di Ara­bia, Iran, the Unit­ed Arab Emi­rates (UAE), Egypt and Ethiopia in 2024¹, is reflect­ed in their larg­er share of the world’s pop­u­la­tion (46%) and inter­na­tion­al GDP in dol­lars (29%). The main changes are like­ly to be seen in ener­gy and met­al com­modi­ties. Indeed, by includ­ing some of the biggest exporters or hold­ers of reserves on the hydro­car­bon mar­kets (oil and gas) and mem­bers of the Organ­i­sa­tion of Petro­le­um Export­ing Coun­tries (OPEC), the BRICS+ are posi­tion­ing them­selves as gen­uine poten­tial com­peti­tors to the dol­lar on the oil mar­kets, and there­fore to the Unit­ed States. In the met­als sec­tor, the sheer weight of Brazil, Chi­na, Rus­sia and South Africa makes the BRICS major play­ers on the mar­kets. And that’s not count­ing Sau­di Ara­bia, a future min­ing pow­er and the pos­si­ble future inte­gra­tion of Indone­sia, the Demo­c­ra­t­ic Repub­lic of Con­go (DRC) and Chile.

Con­trol­ling the key raw mate­ri­als sec­tors is now fun­da­men­tal in the con­text of glob­al decar­bon­i­sa­tion. Met­als have become increas­ing­ly impor­tant due to their grow­ing use in many low-car­bon tech­nolo­gies such as pho­to­volta­ic pan­els (alu­mini­um, sil­ver, cop­per, sil­i­con), wind tur­bines (alu­mini­um, cop­per, nick­el) and elec­tric vehi­cles (cobalt, cop­per, lithi­um, man­ganese, etc.). Are we there­fore in dan­ger of see­ing the birth of a new alliance based on raw mate­ri­als, which would use them as diplo­mat­ic lever­age in a world of cli­mat­ic, eco­nom­ic, and geopo­lit­i­cal insecurity?

What the BRICS+ have in com­mon is that their devel­op­ment has been under­pinned by state-build­ing and a promi­nent pub­lic sec­tor. Many of them are mem­bers of the WTO² and have tak­en advan­tage of the momen­tum of glob­al­i­sa­tion and trade to become involved in inter­na­tion­al trade through the sup­ply of raw or processed nat­ur­al resources. While the BRICS+ account for around 25% of glob­al exports, intra-BRICS+ exports rep­re­sent only 15% of the group’s exports: the G7 coun­tries remain the main part­ners of these dynam­ic economies³. Their eco­nom­ic mod­els are part­ly based on the exploita­tion of raw mate­ri­als. In 2023, the BRICS group will account for around 30% of the world’s GDP and 46% of its pop­u­la­tion, while the G7⁴ will account for 10% of the world’s pop­u­la­tion and 45% of its GDP. How­ev­er, if we look at world GDP in pur­chas­ing pow­er par­i­ty (PPP)⁵, the BRICS account for 31% com­pared with 29% for the G7: a his­toric over­take that under­lines the group’s dynamism. And the recent enlarge­ment of the BRICS con­firms the group’s eco­nom­ic and demo­graph­ic weight on the inter­na­tion­al stage, with 34.5% of world GDP in PPP⁶.

Since 2011, the mem­bers of the BRICS (and now the BRICS+) have met annu­al­ly to dis­cuss coop­er­a­tion between their mem­bers, with the stat­ed aim of increas­ing their influ­ence in inter­na­tion­al nego­ti­a­tions. In 2014, the group cre­at­ed the New Devel­op­ment Bank, known as the BRICS Bank, with an ini­tial cap­i­tal of 100 bil­lion dol­lars to encour­age invest­ment in infra­struc­ture in devel­op­ing coun­tries⁷. The coun­tries have also signed a frame­work agree­ment designed to sup­port mem­bers’ liq­uid­i­ty in the event of dif­fi­cul­ties with their bal­ance of pay­ments. Eco­nom­ic and finan­cial agree­ments, part­ner­ships, joint invest­ments… The BRICS offer an alter­na­tive form of gov­er­nance on the world eco­nom­ic stage. They also form a group that is cur­rent­ly attrac­tive to oth­er coun­tries, but whose mem­ber­ship cri­te­ria remain unclear, with enlarge­ment requir­ing unanimity.

The entry of Sau­di Ara­bia and the UAE has strength­ened the group’s glob­al influ­ence in the ener­gy sec­tor. The BRICS+ now account for 43.1% of oil pro­duc­tion and 44% of oil reserves⁸. As for gas, they account for 35.5% of glob­al pro­duc­tion and 53% of glob­al reserves⁹. The Chi­nese President’s sup­port for the entry of coun­tries such as Nige­ria and Kaza­khstan also sig­nals China’s desire to strength­en the BRICS+’s influ­ence in ener­gy¹⁰. In terms of food com­modi­ties, the enlarged group cur­rent­ly pro­duces 42% of the world’s wheat, 52% of its rice and 46% of its soya¹¹. Along with Brazil and Rus­sia, its exports to world mar­kets make it one of the pil­lars of glob­al food secu­ri­ty¹²¹³.

At a time when met­als are becom­ing cen­tral to the low-car­bon and dig­i­tal tran­si­tion, the BRICS+ now occu­py a dom­i­nant posi­tion in both the pro­duc­tion and glob­al reserves of cer­tain crit­i­cal met­als such as plati­noids, rare earth ele­ments and copper.

By boost­ing their pro­duc­tion and devel­op­ing the min­er­al poten­tial of their sub­soil, each BRICS+ coun­try is seek­ing above all to secure its own met­al sup­plies and strength­en its posi­tion as a pro­duc­er of crit­i­cal raw mate­ri­als. For Chi­na, this strat­e­gy of secur­ing sup­plies is aimed at ensur­ing the long-term via­bil­i­ty of its pro­duc­tion of low-car­bon tech­nolo­gies such as elec­tric vehi­cles and solar pan­els. Mem­ber coun­tries are also diver­si­fy­ing their invest­ments to strength­en their posi­tion in oth­er strate­gic met­als that they do not pro­duce. Sau­di Ara­bia illus­trates this poly­mor­phous strat­e­gy for prepar­ing for the post-oil era: devel­op­ing the domes­tic min­ing indus­try, stim­u­lat­ing for­eign invest­ment (FDI), launch­ing part­ner­ships and aim­ing to become a region­al hub for ener­gy and met­al trade¹⁴. For instance, the Sau­di monar­chy has announced that it is tak­ing a stake in the Brazil­ian group Vale through its min­ing com­pa­ny Man­ara in order to secure its lithi­um and nick­el sup­plies¹⁵. At the end of 2010, it also launched pro­duc­tion of tita­ni­um sponge, a key raw mate­r­i­al for the arms and aero­space sec­tors, with a project bring­ing togeth­er the Japan­ese com­pa­ny Toho and the Sau­di com­pa­ny AMIC¹⁶. By 2022, the Sau­di econ­o­my will be the world’s 16th largest exporter, accord­ing to the Obser­va­toire économique de la com­plex­ité¹⁷.

In addi­tion to their abun­dant resources, the group’s dom­i­nant posi­tion is also reflect­ed in their com­mon pol­i­cy of restrict­ing exports of strate­gic met­als¹⁸. All the BRICS+ coun­tries have intro­duced dif­fer­ent restric­tions on the export of met­als, rang­ing from export tax­es to out­right bans and the non-auto­mat­ic allo­ca­tion of licences to com­pa­nies. For exam­ple, in Decem­ber 2023, Chi­na banned the export of tech­nolo­gies need­ed to process and refine rare earths, in the name of nation­al secu­ri­ty¹⁹. While Chi­na cur­rent­ly extracts 60% of rare earth ele­ments, it process­es 90% of the world’s pro­duc­tion. The aim of the ban is there­fore to secure China’s tech­no­log­i­cal lead²⁰ in these essen­tial met­als, which are used in the man­u­fac­ture of per­ma­nent mag­nets used in off-shore wind tech­nol­o­gy, elec­tric vehi­cle engines and smart­phones. In the future, a coor­di­nat­ed approach to restric­tive poli­cies could under­mine the ener­gy secu­ri­ty of Europe and the Unit­ed States, both in terms of sup­ply and technology.

The BRICS+ are strength­en­ing their ties through cross-invest­ments and part­ner­ships, which seems to be rein­forc­ing a bloc log­ic, par­tic­u­lar­ly in the met­als and tran­si­tion tech­nolo­gies sec­tors. The entry into the club of the UAE and Sau­di Ara­bia, which have finan­cial capac­i­ty, strength­ens the group’s invest­ment capa­bil­i­ties. Sau­di Ara­bia has launched part­ner­ships with Brazil (Vale), Chi­na (Human Hori­zons) and Egypt. Fur­ther­more, although the Unit­ed States and Chi­na are both invest­ing in the BRICS+, the com­po­si­tion of their FDI is very dif­fer­ent: Chi­nese FDI focus­es on man­u­fac­tur­ing, con­struc­tion and elec­tri­fi­ca­tion, while Amer­i­can FDI is con­cen­trat­ed in the ser­vices, R&D and ICT sec­tors²¹. Chi­na is there­fore seek­ing to gain greater con­trol over the tech­no­log­i­cal val­ue chains at the heart of the low-car­bon tran­si­tion. The BRICS+ group there­fore seems to be part­ly struc­tured around finan­cial flows in strate­gic mar­kets such as metals.

How­ev­er, to real­ly devel­op a met­als bloc, the BRICS+ need to inte­grate a few more coun­tries. The addi­tion of key mem­bers such as Chile, the Demo­c­ra­t­ic Repub­lic of Con­go (DRC) and Indone­sia would rad­i­cal­ly increase the group’s dom­i­nance of the met­als mar­ket. The DRC accounts for 74% of the world’s cobalt pro­duc­tion and 55% of its reserves, while Chile is a major pro­duc­er of cop­per and lithi­um. While the DRC has expressed a desire to strength­en its ties with the BRICS+²², the oth­er two coun­tries do not cur­rent­ly appear to be inter­est­ed in an alliance with the bloc. After hint­ing that it would join the BRICS+ fol­low­ing an invi­ta­tion²³, Indone­sia final­ly refused to join, ques­tion­ing the real eco­nom­ic gains behind this mem­ber­ship²⁴. South­east Asia’s ris­ing econ­o­my, which pro­duces 50% of the world’s nick­el, there­fore prefers to remain inde­pen­dent and non-aligned, as it has been in the past. 

These dis­cus­sions about whether or not to join the BRICS+, despite the con­ver­gence of their eco­nom­ic inter­ests, raise ques­tions about the uni­ty of the bloc. The BRICS+ share a desire to com­pete with the major West­ern economies, to assert them­selves on the inter­na­tion­al stage and to reform the inter­na­tion­al mon­e­tary sys­tem, but the mem­bers are divid­ed on sev­er­al issues. Het­ero­ge­neous polit­i­cal regimes, a lack of eco­nom­ic con­ver­gence, geopo­lit­i­cal dis­agree­ments, oppos­ing alliances, notably with the Unit­ed States, and region­al com­pe­ti­tion between Chi­na and India or Indone­sia – all these fac­tors ham­per the uni­ty of the bloc. It would appear that join­ing the BRICS+ is part of a strat­e­gy to diver­si­fy part­ner­ships, rather than the par­tic­i­pa­tion in a new ide­o­log­i­cal bloc. Today’s inter­na­tion­al rela­tions are based on mul­ti-align­ment and trans­ac­tion­al log­ic: each play­er will forge an ad hoc and sec­toral alliance in line with its own inter­ests. It is this log­ic that has enabled Sau­di Ara­bia to renew its strate­gic and secu­ri­ty part­ner­ship with the Unit­ed States while strength­en­ing its ties with Chi­na and join­ing the BRICS+. On the issue of met­als, how­ev­er, the inter­ests of the mem­bers are fair­ly con­ver­gent – con­trol over the pro­duc­tion of strate­gic met­als and there­fore con­trol over prices, a dom­i­nant posi­tion on tran­si­tion issues, a monop­oly on tech­nolo­gies – which makes the devel­op­ment of a min­er­al bloc, or at the very least the coor­di­na­tion of extrac­tive and trade poli­cies, credible.

The risk of carteli­sa­tion is forc­ing oth­er play­ers, and Europe in par­tic­u­lar, to con­sid­er the place of met­als in future inter­na­tion­al rela­tions and the risk this rep­re­sents for their own sup­plies²⁵. Euro­peans have had a rude awak­en­ing on the gas mar­kets fol­low­ing Russia’s inva­sion of Ukraine²⁶ and met­als have become a cen­tral issue for Europe, as the costs of the eco­log­i­cal tran­si­tion will depend heav­i­ly on the price of these raw mate­ri­als. Aware of the stakes, in 2023 the Euro­pean Com­mis­sion pub­lished a reg­u­la­tion, the Crit­i­cal Raw Mate­r­i­al Act, to ‘sup­port the devel­op­ment of domes­tic capac­i­ties and strength­en the sus­tain­abil­i­ty and cir­cu­lar­i­ty of sup­ply chains²⁷’ for crit­i­cal raw mate­ri­als. How­ev­er, this is a sign of the grow­ing ten­sion in these mar­kets and a grow­ing aware­ness of the return of con­flict to their core. These ten­sions could ulti­mate­ly pro­vide an oppor­tu­ni­ty for Europe to devel­op its own extrac­tive indus­tries on its own soil, which would meet the sus­tain­abil­i­ty stan­dards that the Old Con­ti­nent has set itself, while export­ing its envi­ron­men­tal stan­dards to the rest of the world. Cou­pled with a pol­i­cy of sobri­ety and a major recy­cling sys­tem, Euro­pean mines would improve secu­ri­ty of sup­ply by reduc­ing our depen­dence on a poten­tial BRICS+ cartel.