Raw material diplomacy

Relevance of raw material diplomacy

The significance of raw material diplomacy is multifaceted. Economically, controlling raw materials enables states and businesses to secure the resources needed for industrial production, technological advancement, and economic growth. The discovery and exploitation of strategic raw materials, such as oil, rare earth metals, and lithium, can confer considerable geopolitical leverage, allowing states to influence or even dominate global markets.

On a philosophical level, this form of diplomacy often raises important questions about equity, resource distribution, and sustainability. This is especially relevant in developing countries that possess substantial reserves of natural resources but have limited control over their extraction and trade. Moreover, raw material diplomacy is closely linked to environmental issues, as the global community strives to balance resource extraction with the need to preserve ecosystems and achieve climate goals.

Methods of raw material diplomacy

Raw material diplomacy is conducted through various methods, including negotiations, trade agreements, lobbying, and strategic partnerships. Governments and corporations negotiate directly for long-term supply contracts, using diplomacy to overcome barriers like sanctions. Economic promotion, such as incentivizing extraction and attracting foreign investment, is also key. Lobbying is used to advocate for policies favouring access to materials or protecting domestic industries. Multilateral forums like the UN and WTO are utilized to influence policies on distribution and pricing.

Key methods include:

• Negotiations and bilateral agreements: For example, Serbia has committed to prioritising European carmakers like Mercedes-Benz and Volkswagen over Chinese companies for lithium sales from the Jadar deposit, one of the world’s largest lithium mines.
  
• Economic promotion and investment: Nations invest in infrastructure and technology to enhance domestic resource extraction and processing capabilities. The EU has initiated projects to increase the production of critical minerals like gallium in Greece, aiming to reduce dependence on external suppliers.
  
• Lobbying and advocacy: Governments and industry groups lobby for favourable policies and regulations that facilitate access to raw materials. The EU’s Critical Raw Materials Act is a legislative response to the risks of supply disruption, aiming to ensure secure and sustainable access to essential resources.

Raw material diplomacy occurs at multiple levels:

• Bilateral: Countries with reserves, like African nations, make agreements with industrial powers such as China or the United States.
• Regional: Trade blocs like the European Union work within regional frameworks to secure supplies and reduce external dependency.
• Multilateral: Forums like the United Nations, WTO, and the Extractive Industries Transparency Initiative (EITI) set international norms for extraction and trade, focusing on fair practices and environmental standards.

Historical development and key moments

Raw material diplomacy has played a vital role since the Industrial Revolution, which saw a significant increase in global demand for raw materials. During the colonial period, imperial powers sought to gain control over raw material sources in Africa, Asia, and the Americas, often employing coercion and unequal treaties to extract valuable resources. 

In the 20th century, the emergence of multinational corporations and the establishment of organizations like OPEC (the Organization of the Petroleum Exporting Countries) in 1960 greatly transformed the landscape of raw material diplomacy. OPEC was formed as a direct response to the dominance of Western oil companies and the desire of oil-producing nations to gain control over their resources and secure better terms for oil extraction and trade.

The 1970s and 1980s witnessed a wave of resource nationalism, with countries in Latin America and Africa striving to nationalize their industries and exert greater control over their raw material exports. In recent decades, raw material diplomacy has continued to evolve in response to new challenges, such as the rise of renewable energy technologies and the growing importance of critical minerals like lithium, cobalt, and rare earth elements in the production of batteries and electronic devices.

Actors in raw material diplomacy

The actors involved in raw material diplomacy are diverse and include governments, multinational corporations, state-owned enterprises, and international organizations. 

Governments are central players because they control access to and regulation of resources within their territories. Multinational corporations, such as Shell, ExxonMobil, and Rio Tinto, play a crucial role in extracting, processing, and trading raw materials, often having significant influence over global supply chains. 

State-owned enterprises, such as Saudi Aramco and Gazprom, are also key players in resource-rich countries where the government retains direct control over resource extraction. Additionally, non-state actors, including NGOs, environmental organizations, and activist groups, have increasingly become involved in advocating for responsible sourcing and sustainable practices in raw material extraction.

Examples of raw material diplomacy

One of the most significant examples of raw material diplomacy in recent history is the 1973 oil crisis. The Organization of the Petroleum Exporting Countries (OPEC), led by nations like Saudi Arabia, imposed an oil embargo on the United States and other Western countries in response to their support for Israel during the Yom Kippur War. This embargo resulted in soaring oil prices and highlighted the geopolitical influence of raw materials, particularly energy resources.

Another important example is China’s Belt and Road Initiative (BRI), which has played a crucial role in securing access to essential raw materials across Africa, Asia, and Latin America. Through investments in infrastructure and trade agreements, China has enhanced its access to minerals and metals vital for its industrial and technological development, including rare earth elements, cobalt, and lithium.

Raw material diplomacy is an essential component of international relations, closely connected to global economic and geopolitical dynamics. The strategies used, such as negotiation, economic promotion, and lobbying have been employed by states and corporations for centuries, influencing the global balance of power. As the demand for resources continues to increase and concerns about sustainability rise, raw material diplomacy will remain a crucial diplomatic tool for managing the complexities of resource management in the 21st century.