Egypt has embarked on a high-stakes venture to convert structurally untapped areas of its territory into one of the major pipelines of the modern world, creating an alternative technology-driving trade route through strategic partnerships with Chinese state enterprises in the rare earth industry.
The rare earth elements are a group of seventeen metallic elements that provide the fuel for many of today’s most important technologies. Because of this importance and the difficulty of extracting and refining rare earth elements, they are some of the most difficult minerals to access. The dominant role that China plays in this market means that the Chinese government and its state companies wield a great deal of influence over the supply chain, pricing of the products, and all of the related activities that go along with producing these materials. The stakes involved in this newest opportunity for Cairo are substantial and will have a significant impact on the future shape of trade routes and methods of manufacturing across the Middle East and Africa, in addition to their construction as new entry points for the importation and exportation of goods and services.
The driving force behind Egypt’s agenda is to expand its economic capabilities beyond dependence upon Suez Canal tolls and tourism by developing a manufacturing sector that would enable the country to manufacture higher value-added goods using locally produced resources. As part of the Vision 2030 initiative, mineral processing has been recognized by Egyptian authorities as a critical means of enhancing Egypt’s contribution from the manufacturing sector to the overall Gross Domestic Product, which would also generate thousands of new jobs, provided that appropriate funding mechanisms and training are established to support this development.
Though the geology of Egypt is compelling, particularly when considering the geological regions referred to as the “Golden Triangle,” which encompasses much of Egypt’s Eastern Desert and Red Sea Coastal Region and contains deposits of phosphate-associated minerals, monazite-rich sands, and iron oxide apatite, expectations of the extent to which these resources will develop commercially are presently premature due to a lack of independent and peer-reviewed resource estimates, leaving large portions of the commercially viable resource potential out of focus.
Cairo’s interaction with Chinese businesses is crucial for Egypt to achieve significant benefits from having an “end-user’s” presence, which adds value by processing materials before they are exported as raw materials. “Optimists” see the growth of integrated facilities and the creation of jobs from worker training, along with the addition of downstream sectors (such as magnets, alloys, and catalysts) that will allow Egypt to significantly increase exports and create jobs. “Pessimists” believe that Egypt will continue to export concentrate, resulting in profits that are realized in other countries. The coming years will determine if Egypt can successfully achieve industrial independence by using its institutional policies, regulatory structure, and technical know-how or if it will continue to place all its eggs in someone else’s basket (the existing global supply chain). Either way, the future of rare earths is no longer a fringe subject hidden in geology journals; instead, the value of rare earths will increasingly be recognized as strategic assets. It is likely that Egypt’s gamble on rare earths will change the dynamics of the technology market moving forward.
