The US International Development Finance Corp plans to increase direct equity investments, including in Africa and the critical minerals sector, the agency’s Africa head said, as the US steps up efforts to counter China’s dominance of key supply chains.
Critical minerals have become a focal point of global competition, with the US and other major economies seeking to secure supply chains for electric vehicles and renewable energy, while reducing dependence on China.
The DFC, the US government’s main investment arm, said in September it would invest up to $155 million in African digital infrastructure provider WIOCC, its largest ever equity commitment.
DFC Regional Managing Director for Africa Vibhuti Jain told Reuters that, where strategically significant, “you will see us deploy equity in addition to or in place of other instruments”.
“There are a number of projects in our equity pipeline right now, including in Africa, (and) including in the critical minerals sector,” said Jain, without providing details.
She said the DFC would continue to provide more debt financing, credit guarantees and political risk insurance than equity investments for the foreseeable future.
“But I think as the agency continues to grow, we will do more equity investments,” she added.
Attention on critical minerals sector
Jain said the DFC has more than $14 billion of investment commitments across Africa and that critical minerals projects, or projects linked to the sector, are a major driver of new investments.
More than $3 billion of those commitments are in critical minerals, the DFC said.
“So really, this is a sector to which we’re paying close attention,” Jain said.
In addition to financing a pipeline of African critical minerals projects, including rare earths developments and a graphite mine in Mozambique, the DFC is backing the rehabilitation of the Lobito minerals transport corridor linking African copper and cobalt mines to the Atlantic coast.
(Reporting by Olivia Kumwenda-Mtambo. Editing by Mark Potter)
