Moderator: Good afternoon to everyone from the U.S. Department of State’s Africa Regional Media Hub. I would like to welcome our participants dialing in from across the continent and thank all of you for joining this discussion. Today, we are very pleased to be joined by Francis Fannon, Assistant Secretary in the Bureau of Energy Resources. Assistant Secretary Fannon will discuss U.S. energy diplomacy and sustainable energy minerals development in Africa. Assistant Secretary Fannon is speaking to us from Gaborone, Botswana.

 

We will begin today’s call with opening remarks from the assistant secretary and then they will turn to your questions. We will try to get to as many of them as we can during the time that we have, which is approximately 45 minutes. If you would like to join the conversation on Twitter, please use the hashtag #AFHubPress and follow us on @AfricaMediaHub and @EnergyAtState.

 

As a reminder, today’s call is on the record. And with that, I will turn it over to Assistant Secretary Fannon for opening remarks.

 

Assistant Secretary Fannon: Hello. Thank you. Thanks for arranging the call, thank you for everyone dialing in. Delighted to be here in Botswana. This is the – coming to the end of my week in Southern Africa. I started off in Cape Town at Africa Oil Week. I was delighted to be back there. I went there several years ago in a private capacity, and to be in this one, it was great to be back.

 

Then I moved to Namibia and, now, in Botswana. The purpose coming to both countries is in regards to our new initiative: the Energy Resources Governance Initiative. We formed ERGI with a couple of countries.  First, we recognize that the world is increasingly demanding cleaner forms of energy.  This is really a bottoms-up phenomenon that makes it credible, meaningful, and to scale.  Of course, the world will require 50 percent more energy in 2040 than we produce today and an increasing percentage of that drive for electricity is for cleaner forms.

 

Cleaner forms of energy are minerals-intensive. The World Bank did a report in 2017, which I would encourage everyone to take a look at, which posed a question, “What if the world were to achieve a two-degree scenario? What would that mean for renewables and battery storage and other renewable energy technologies, and by implications, the demand for minerals?” They had some pretty fantastic projections on how demand will increase.

 

The United States has ongoing work bilaterally with a variety of mineral-rich countries to help them develop their own capacity to develop those mineral resources sustainably and responsibly. We work in partnership with countries in that cause. That work continues. But we also recognize that the United States, who has one of the best – is a leading producer in terms of best practice – well, we’re not the only ones. There are others around the world who also have a good story to tell.

 

And so we convened a few other countries together, spanning four different continents, to come together and identify why have our respective countries been successful over the longer term to responsibly, sustainably develop our resources, provide an economic engine to our communities, do it sustainably, and also to ensure that there’s a shared-value concept – that everyone gets a benefit. That work, again, we’re not the only ones who do it. So we identified some countries who have a track record: Australia, Canada, Peru, and Botswana have all demonstrated this ability over the longer term and have a very strong record of responsible sourcing. Ways that we’re coming together to develop what is best practice regardless of our very distinct cultures, histories, and regulatory environments. But we believe strongly that there will be a shared sense of best practice, we’ll identify what those are, and then develop means to share that story, to share that road map, that tool kit, to other countries who similarly would like to develop their economies to be able to provide the minerals that will fuel the clean energy technology of today and to years into the future. That’s the idea.

 

I was in Namibia. We talked about their potential, also their needs for energy domestically. Botswana, again, one of the strongest track records in terms of their own mining industry. But also they have some very near term and pressing needs to develop their own indigenous energy. So we’ve had the ERGI conversations as well as the bilateral conversations. I would note that the – a new administration here in Botswana has a strong mandate to proceed with a five-year term, and also part of that, their victory was based around governance-related issues. So there’s clearly a line with the domestic agenda as well as the international agenda.

 

So with that, why don’t I pause with those introductory remarks and invite questions.

 

Moderator: Thank you. Thank you for your description of your trip. I’m wondering if you could explain just a little bit more about the Energy Resource Governance Initiative, and perhaps describe which countries are part of that, and how does participation benefit them?

 

Assistant Secretary Fannon: Sure, thank you. Well, the countries that are currently – we described as one of the founding partners would be Peru, Canada, Australia, and Botswana. And we’re currently in discussions to formalize this agreement so that our respective countries have a shared sense of commitment going forward, so that is ongoing. Those discussions are ongoing and we hope to have some pretty significant announcements in the relative near term.

 

What this concept is about is looking at the drive for clean energy technologies. We all see investor-related environment social governance and related pressures of corporates around the world when it comes to issues with respect to climate change and greenhouse gas emissions. There will be, and we’re starting to see, similar kind of public pressure, scrutiny around the minerals that go into products. The worst thing that can occur to any country, especially one that is in need of developing their economy through mineral development, is for the global supply chain to declare them as an unfavorable supplier. That’s bad for the economy of that country, it’s bad for the supply chain globally, and the ability to meet the demand for cleaner forms of energy for all of us. So what we’re seeking to do is work in partnership with countries that want this support through this multi-country frame.

 

Now, what does this give – what does the opportunity give for the founding partners? First, it provides a key mechanism through government-to-government multilateral frameworks to discuss regulatory structures and best practice and areas to avoid. It allows for them, as already leaders, to be recognized as such in the global community and allows them to encourage others around the world to similarly responsibly develop their resources. We believe that together we will be able to improve the conditions of the world, and I’m sure that issues that are immediate, like human rights, ecological destruction, areas of any modern slavery, these will all be shared. These are principles that our countries have already ascribed to do, and so we’re already committed to their expansion globally. Thank you.

 

Moderator: Thank you. Our next question was sent in advance from Benoit Faucon of the Wall Street Journal. He asks: Do you see increased Russian presence in Africa’s natural resources sector? Is this a matter of concern?

 

Assistant Secretary Fannon: Yeah, thank you. I can’t speak to whether I’ve seen a necessary increase. I haven’t – an increase from when. But the issue of it being a matter of concern, I don’t think it’s a matter of concern, I think it’s a matter of what are they doing? The issue isn’t – our concern wouldn’t be necessarily tied to the country from which any company hails, but what is their behavior in a country. And what I think we all need to ascribe to is to stand up for the shared values that we’re talking about and the concept of shared benefit, shared value, transparency, and similar ideals. And if any company from wherever they came ascribes for such values, then there shouldn’t be any issue.

 

Moderator: Thank you. Our next question came in from Steve Horn of the Real News Network, who asks: Where within Africa are the State Department’s highest priority areas as regards energy? How does the Trump administration hope to achieve those priorities?

 

Assistant Secretary Fannon: Well, let me speak to what we do at the State Department. I focus on – the State Department, obviously, is not a technical agency. We – in my bureau, the Bureau of Energy Resources, we focus on where energy is really a bigger issue, a matter – and it affects foreign policy. So what do I mean? Energy is more than just BTUs of barrels. Energy is foundational to the economic development of a society or to a country. It empowers business, it empowers progress and human capital. Energy is foundational to political stability.

 

As such, what we do is we partner – and I mean partner – with countries around the world based on their own self-determined pathway. Where do they want to go; what is their ambition? And we work cooperatively with governments to help them to achieve it. When it comes to Africa, we see great promise in a lot of domains and we see increasing level of interest from the U.S. private sector in Africa, and we want to make sure that they’re – of course, they’re successful, but the countries are successful.

 

I just spoke at Africa Oil Week a few days ago, and in my remarks I mentioned – I noted that globally – part of our global [inaudible] – everywhere I go, every minister, head of state, or other public officials all have one thing in common:  They all said they want more U.S. investment.  And so what we try to do is talk to

governments who want to see that U.S. investment how to create the appropriate incentives to business climate to attract U.S. business. So those are bilateral diplomatic conversations we have on a routine basis and those are continuing. We’re not prescriptive in the type of energy in which we’re focused on. Again, we work with partnership with countries based on their self-determination. Thank you.

 

Moderator: Thank you. Operator, our next question will go to Kevin Kelley from Nation Media Group. If you could open the line, please.

 

Operator: Your line is open.

 

Question: Yeah, great. Hi. Good morning from New York. Thanks for doing this. So I’m wondering if you can speak to the what seems in some ways a contradiction. Reuters was reporting from the Oil Week conference that a number of ministers from Africa and oil-producing countries were saying they’re unapologetic for developing the oil resources, that it’s a source of jobs, it’s a way to combat poverty, and global warming concerns are secondary.

 

You sound like you’re – the United States policy is much more focused on encouraging use of renewables because of awareness about fossil fuel’s contributions to climate change. At the same time, the U.S. has just withdrawn from the Paris Climate Accords. It’s, to me, a confusing picture. Can you help sort that out? Thanks.

 

Assistant Secretary Fannon: Sure. We work – and I met with many, many ministers in Africa Oil Week.  We go to these events because they’re pretty time efficient – you can talk to a lot of people.  They certainly would like to develop their oil and gas resources, but they also want to develop their indigenous energy of all types.  We have ongoing programs where we help them to do just that.

 

There’s considerable interest in solar. I’m here in Botswana and I was in Namibia before – they have considerable solar resource potential and they want to develop it. A lot of challenges that they have on why they’re not able to develop it tend to be the issues with respect to the way regulatory structures have been framed, and they’re kind of new to the game. I think it’s a great opportunity for them to do just that.

 

The issue about is it – is development of a hydrocarbon is inconsistent with renewables I think is a false premise. A few months ago, or maybe a month and a half ago, I was in New Delhi and I was there working with a program under an existing program we have focused on clean energy. Prime Minister Modi has very ambitious renewable energy targets. He’s doing pretty well on capacity, their government is, but they have a variety of discordant policies otherwise that is holding them back in some forms of utilization. I was there with the Chairman of the Federal Energy Regulatory Commission to expand the aperture of clean energy to consider flexible resources. When you see renewables deployed at scale, natural gas tends to be the foundation upon which renewables are built because it can address the interoperability of – and the intermittency that renewables present.

 

So I think it’s the notion of fossil – hydrocarbon-based fuels – forms of energy with renewables, and I see them completely complimentary. And they are reinforcing one another. What we’re seeing here is the drive for – if the world demands cleaner forms of energy, non-hydrocarbon-based, which we certainly are seeing again from a bottoms up, then it’s going to drive minerals extraction. And we want to ensure that the countries that would like to develop their minerals resource do so responsibly based on what they want to do. Thank you.

 

Moderator: Thank you. Our next question – oh, he’s off the call now. We had Mohamed Ataya from Masrawy.com. I’m wondering if you could just explain – could the launch of this initiative, the Energy Resources Governance Initiative, could that be interpreted as a response to the recent threat by China to reduce exports of rare earth elements to the U.S.?

 

Assistant Secretary Fannon: Yeah, thanks for the question. Backing up, I don’t think the issue of resources – critical minerals, however one wants to scope it – is related to anything recent with respect to China.

 

The President issued at the outset an executive order directing there to be a review of critical minerals in the United States. This is a big bucket of resources. I think we’ve identified 35 different resources that go into all manner of components and defense logistics. Of course, energy is a part – rare earth is a part of that.

 

But this was something that was initiated some years ago. There was a subsequent critical minerals report that was issued, which identified some opportunities to develop a domestic – U.S. domestic supply chain to ensure that these 35 minerals – the demands that the U.S. has for these 35 minerals could be met. We had bilateral discussions with the Canadians and with the Australians on both rare earth and critical minerals. These are ongoing discussions. I don’t think they’re – there’s certainly been recognition of some – of a deficit, a domestic deficit, but I don’t think it’s necessarily in response to anything that the Chinese have done recently.

 

Rare earth gets a lot of attention and rightfully so because that would be one – there’s a suite of minerals in which the U.S. is – not just the U.S. but also other countries have – need to do more to develop a new supply chain. But I think this ERGI initiative which is targeting energy-related minerals, that’s a different subset of the broader critical minerals. We’ve identified 15 of these energy resource minerals, and that’s the focus of this initiative. Thanks.

 

Moderator: Thank you. We have just a few more minutes left. Does the Energy Bureau have any experience partnering with countries in Africa to improve their capacity to manage their mineral sector?

 

Assistant Secretary Fannon: Well, we have ongoing initiatives with other countries, and those have been publicly reported on. We have great opportunity to do so in Africa. ERGI is a new initiative. And what we – again, we do a partnership-based model, so we understand several countries are interested in partnering with us through ERGI, I’m sure as well as through bilateral engagements, and those discussions are ongoing. Thanks.

 

Moderator: Great. All right, we have just one more set of questions before closing remarks. The growing demand for minerals in the energy sector poses challenges to all nations that process and export them. Are there specific challenges as related to African countries that require particular attention? And how do you propose your bureau address them or assist African nations in confronting those challenges?

 

Assistant Secretary Fannon: I’m sorry. I didn’t – couldn’t quite hear the question. Would you mind paraphrasing?

 

Moderator: Yeah, if there are specific challenges in Africa – let’s say that if there are different than in other countries in terms of the countries that actually possess those rare – those minerals. If there are particular challenges here that you can address.

 

Assistant Secretary Fannon: Yeah. Well, what we’re hearing from some of the countries is that there’s a couple of areas. First, there’s a lack of awareness, or I guess an increasing level of awareness of what it is that they have. To do the type of geologic survey work to really understand the resource potential requires time and capacity, technical know-how, and money. And so that’s one area that they are increasingly interested in better understanding, first, what they have.

 

And secondly, these are minerals that have only recently increased in demand, so only recently is there a market signal that’s generating, that’s catalyzing interest in development of those minerals. So they’re all a bit playing catch-up, as well as the rest of the world, as to how to create the appropriate enabling environment for maximum development, but doing so in the right way.

 

And then thirdly, it I would say would go to more of the above-ground conditions. What are the requirements that they would have to bring in private sector? And then how do they make sure that they’re keeping pace with – and being globally competitive? Again, they all want to see the same kind of investment and the same kind of transparent, best practice companies – companies with the strongest environment, health, safety records. They all want that. But there’s a global competition for that same kind of investment. And so how do they ensure that they get the right kind of companies and the right levels of return that have the shared value concept over the long term.

 

A mine project – these are things that have 20 to 50-year lifespans. They want to make sure they partner with a responsible company and with responsible partners. So these are the kinds of conversations that we’re having. The real positive here is that the African nations with whom we’re speaking see it. I mean, they all see it. They see the opportunity, and they’re really interested in expanding and deepening the partnership.

 

Thank you.

 

Moderator: Great. Thank you very, very much. We have no further questions in our queue. So if you have any closing remarks, please share with us.

 

Assistant Secretary Fannon: Yeah, thank you so much. Look, we’re pretty passionate about ERGI concept. I think it’s undeniable the demand, that it’s happening for forms of clean energy, renewable, solar, wind, electric vehicles, battery storage technologies. The demand is going – it’s kind of unprecedented, and the pressure this has on minerals is significant.

 

As I’ve mentioned before, as clean and green as any energy technology is, it requires really big shovels at the beginning of its life cycle, and we should all be concerned and be mindful of where and how those big shovels are being deployed. ERGI is a construct, a government-to-government initiative that seeks to ensure that there’s global clarity amongst governments as what best practice is, and then we provide the tools for other countries to incorporate them as they’d like to do.

 

We already know that we’re seeing signs of retailers, the end users of these minerals expressing increasing levels of concern about issues of sourcing, of human rights, of environmental harm. And we want to make that their needs are met, that they are able to get the supply chain that they need, and also, importantly, that the countries that have the resource wealth are able to provide it and their countries can benefit. This is really a concept built on partnership to support capacity and governance of countries. And it’s in that spirit that we’re working across four continents to deliver that to other parts of the world.

 

I very much appreciate all of your time in listening. It’s been a great time here in Southern Africa, and I look forward to continuing this discussion in the future. Thank you.

 

Moderator: Thank you very much. That concludes today’s call. I would like to thank Francis Fannon, Assistant Secretary in the Bureau of Energy Resources, for joining us and thank all of our callers for participating. If you have any questions about today’s call, you may contact the Africa Regional Media Hub at afmediahub@state.gov. Thank you.

 

U.S. Department of State

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