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.