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.