Huawei in 5G
On May 15 2019, the United States put sanctions on Huawei, the Chinese Tech giant. This signaled a new level in the current trade war taking place between China and the United States. It also confirmed what we’ve all known for some time now, that politically we are back in a bipolar world with two superpowers fighting for supremacy.
By Stembile Mpofu
The US sanctions on Huawei are significant in that they signaled that the technological arena is the new battle frontier. It is now clear that technological might supersedes military might. China is two years ahead of the US in the development of 5G technology, a development that has both commercial and security implications. Since the world is moving from 4G to 5G technology the commercial implications are that if China has the hardware, they will get to set up 5G infrastructure across the world. Once they do that they will be the ones in control of everything that relies on 5G technology to function. 5G technology creates the platform for everything that uses technology to be interlinked, from self-driving cars to airplane and rail systems, phones and servers from all across the world. The security issues become crystal clear when this is considered, it means that whoever controls the 5G infrastructure has the whole world spinning in his hand.
The US sanctions, in a bid to slow the Chinese advance, add Huawei to a list of companies American companies cannot trade with. As a result of the sanctions, Google intends to suspend Huawei’s access to android, meaning that Huawei phone users will not be able to update their software or access Google Search, Maps and Google Play Store. Intel a company that provides processors for Huawei Laptops indicated that they would be withholding their processors from Huawei. Qualcomm, a company that supplies wireless modems for Huawei smartphones also indicated that they would no longer be supplying product. The implications of the effects of the sanctions were truly realised when the British firm ARM, whose processor chips power 95% of the world’s mobile devices, threw in their towel. They indicated that they would no longer issue Huawei with licenses for its smartphone CPUs, citing the fact that some of their subsidiaries are based in the US and would be subject to penalties if they break the embargo.
It is very difficult to assess the impact these sanctions will have on both parties because the propaganda machines for both the US and China are in over drive. Each is downplaying the impact on themselves and hyping up the negative impact on the other. Reading through the many different analyses of the situation, it is difficult to separate facts from fiction and wishful thinking. Despite this there is a fact that emerged at the beginning of June that provides food for thought for Zimbabwe and the countries of the SADC region. The Chinese President Xi Jinping visited one of China’s rare earth plants. The significance of this visit lies in the fact that rare earth elements (REE) are an essential component of the manufacture of all things technological, from smart phones to computer systems, LED lights, wind turbines, defense tools and nuclear rods. And where does the US import 80% of its rare earth elements from? Yes you guessed it, China!
A Chinese ban on exports of REEs to the US would cripple the American high tech manufacturing industry. Ironically China does not have particularly large deposits of REEs, in fact the US and Australia have deposits of their own and could produce them. The snag is in the fact that mining and processing REEs has a very high potential of causing dangerous environmental consequences. It is highly polluting and produces radioactive waste, making it an undesirable product to process. So China has been more willing than others to mine these minerals. So far two companies, Blue Line and Lynas Corp are looking to move to the US from Malaysia to set up REE mining and manufacturing there. They are currently in conflict with the Malaysian government over their refusal to pay for the clean up of radio active substances produced by their companies in the mining process. They may be hoping to use the current trade impasse to push their interests, but with US environmental watch dogs lurking close by, the US government may be looking for other alternatives, and this is where Zimbabwe and the SADC region comes in.
In December of 2012, the London Alternative Investment Market listed a mining company called Premier African Minerals that raised 1.5 million pounds to fund the exploration of tungsten and rare earth elements in Zimbabwe. This was reported in a December 2012 article published on the Investorintel website. Premier African Minerals indicated that their initial focus would be to continue exploration at the former RHA Tungsten Mine and the Katet rare earth elements project. Currently the company is working on the Zulu lithium and tantalum project in Zimbabwe. There are however few rare earth mines around the world. Mining database Intierra lists just over 200 rare earth mine projects and only about 20 list some kind of resource. The majority of these deposits are in Canada, Greenland, US and in the Southern African countries of Malawi, South Africa and Tanzania.
With Zimbabwe being one of the top ranking countries in lithium as far as reserves are concerned and the Democratic Republic of Congo being rich in cobalt, the SADC region is a powerhouse in as far as the production of minerals that will power future technologies. Should the region not use this advantage to leverage its own interests politically and economically?
Since 2006 China has closely monitored its own REE exports, they reduced the amount of REE products Chinese producers could export and have steadily reduced export quotas. As their own internal demand has increased China has increased taxes on exports. With global consumption of REEs set to increase in the future, SADC governments must, like China has done, begin to strategise as a unit in order to take full advantage of their position. Coming up with a regional strategy on how to deal with mining companies seeking to invest in this area will ensure maximum benefit for the region where demands and standards are set regionally rather than at individual country level. The potential negative environmental impact must be noted and high environmental standards must be set that would meet the standards set for any western country. Again these must be negotiated at a regional level rather than the individual country level to ensure high levels of compliance.
It is high time that African countries begin to appreciate the power their mineral resources bestow upon them in the global geopolitical arena. We must begin to take full advantage of this power and use it as leverage when we sit to negotiate politically and economically. Seeing this larger global picture should instill a sense of confidence within Africans and the governments of the continent. As Zimbabwe slowly moves back into the space of opening up to investment, let us do so with a deep sense of self worth. We must be cognizant of the fact that if it was not for what is beneath our soil and the soils of our African neighbours, Huawei, Google, Intel, Qualcomm and all the other high tech companies of the world could not exist. Let us seek investment with a strong sense self-confidence, with heads held high because we are indeed the kingmakers.
This article was first published by the Business Times and it is accessible here.