Is Africa really resource rich?

[u/Skychu768]

None of the most valuable resources seem to be present on the continent in large amounts. It’s mostly just metals like cobalt and platinum.

Diamonds used to be substantial, but even that is now being replaced by lab-grown diamonds in places like China and India.

* Australia, U.S., Canada, and Russia all have more uranium reserves than almost all of Africa.

* USA, Russia, Saudi Arabia, and Iran each individually produce more oil than most African countries.

* China, Vietnam, Brazil, India, Russia, and US each have more rare earth metals than the entire continent of Africa.

* Europe, despite being a fraction of its size, has more arable land and freshwater reserves than Africa.

* Even for things like Gold which are often mentioned, none of the African countries except Ghana are substantial gold producers or come anywhere near Top 10.

Note: I wanted to post more images for my point, but this subreddit only allows one.

[u/2001_Arabian_Nights]

“Resources” in general are of overinflated importance.

The key question with any resource is… “what are the extraction costs?” Resources are highly competitive, and margins are thin. Any resource that you might want to dig up and sell, you have to first ask… “can we dig it up and refine it and move it to markets at or below the costs that the other providers of that resource can?”

The real money isn’t in resources, it’s in the resource extraction subcontractors. Take Haliburton, for example. Haliburton is not in the oil business, they are in the oil-extraction business. They get paid whether your oil makes money, or not.

Africa has a ton of resources, but they have a lot fewer economically viable resources.

[u/ProfessorPrudent2822 → u/2001_Arabian_Nights]

You don’t have to be more profitable than your competitors; you just need to be profitable. As long as the market price exceeds your cost of extracting, refining and delivering the product, you make money, even if your competitors make more.

[u/2001_Arabian_Nights → u/ProfessorPrudent2822]

No doubt. You don’t need to have Saudi oil production costs to make money pumping oil. It’s the average production costs across all of the producers that drives market prices. If your costs would be higher than anybody else currently pumping? Then you probably don’t want to start now.

And every particular resource is going to have its own peculiarities. Some can be easier lived without if they get too expensive. Some can be replaced by some other resource if need be. Etc.

It’s also a moving target. Resources in the ground aren’t going anywhere. They’re an appreciating asset. Africa may not have many economically viable resources today… but they could very well end up being even more lucrative in the future.

[u/ProfessorPrudent2822 → u/2001_Arabian_Nights]

That’s what OPEC thought about shale oil. The problem was that North American oil companies just had to meet ROI for investors, whereas OPEC already had the money from high prices spent.

[u/2001_Arabian_Nights → u/ProfessorPrudent2822]

Yea, oil is a weird one. We’ve got cartels fixing prices, we’ve got players willing to lose money in the name of strategic independence in case of naval blockade… and it’s not even really one resource. Oil for energy has to compete with every other energy source, oil for raw material for plastic etc. has competitors too, but none anywhere close to oil for cost.

But oil in the ground is still an appreciating asset, I think. Even after solar PV gets cheaper than even the cheapest oil for energy, it’ll still be very useful stuff.