The US International Development Finance Corporation (DFC) plans to expand its direct equity investments in Africa, including projects in the critical minerals sector, as Washington intensifies efforts to challenge China’s dominance of strategic supply chains.

DFC Regional Managing Director for Africa, Vibhuti Jain, told Reuters that the agency intends to increase its use of equity financing for strategically important projects as its operations expand.

“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,” Jain said, without disclosing further details.

The agency will, however, continue to rely more heavily on debt financing, credit guarantees and political risk insurance than on equity investments for the foreseeable future.

“But I think as the agency continues to grow, we will do more equity investments,” she added.

The planned expansion comes as critical minerals become increasingly important to global economic and strategic competition. The United States and other major economies are seeking to secure supplies of minerals needed for electric vehicles and renewable energy while reducing their dependence on China.

The DFC, the US government’s main investment arm, has already made a significant commitment to African infrastructure. In September, it announced plans to invest up to $155 million in WIOCC, an African digital infrastructure provider. The investment represents the agency’s largest equity commitment to date.

Jain said the DFC has more than $14 billion in investment commitments across Africa, with critical minerals projects and related developments serving as major drivers of new investments.

According to the agency, more than $3 billion of its African commitments are directed towards critical minerals.

“So really, this is a sector to which we’re paying close attention,” Jain said.

Beyond financing a pipeline of African critical minerals projects, the DFC is supporting rare earths developments and a graphite mine in Mozambique. It is also backing the rehabilitation of the Lobito minerals transport corridor, which connects African copper and cobalt mines to the Atlantic coast.

The agency’s growing interest in equity financing and critical minerals comes as the United States steps up efforts to strengthen supply chains and counter China’s influence in strategically important industries.

Source: Reuters