Brazil, Russia, India, China, and South Africa have invited six additional nations to join the BRICS alliance. The newly invited countries include major oil exporters and critical mineral holders, potentially posing a threat to global energy security.
Twenty-three countries have applied to join BRICS, and BRICS leaders extended invitations to six of them: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE), according to a report from the Center for Strategic and International Studies (CSIS). The report said that with the six new countries, BRICS could take an approach similar to that of the U.S.-led Minerals Security Partnership (MSP), an initiative aimed at bolstering critical energy security for the U.S. and its allies.
With Argentina in addition to China and Brazil, BRICS will have three of the five largest global lithium producers, according to the report. Argentina is expected to become the second largest lithium producer in the world by 2027, surpassing Chile, and to increase its share of the global lithium supply to 16% by 2030, according to a 2022 JPMorgan forecast. Saudi Arabia has also been making major investments in lithium, including a recent $2.6 billion deal to purchase a stake in a prominent Brazilian mining.
Lithium is a critical component of clean energy technologies including wind turbines, batteries, and electric vehicle motors, according to the International Energy Agency.
The CSIS report said BRICS countries have increased their use of critical mineral export restrictions over the last decade, and those restrictions could become more "coordinated" with the addition of the new members.
"Either individual or bloc sanctions could be crippling for national and energy security for the rest of the world," the report said. "An expanded BRICS would have 72 percent of rare earths (and three of the five countries with the largest reserves). The expanded bloc would also hold 75 percent of world’s manganese, 50 percent of the world’s graphite, 28 percent of the world’s nickel, and 10 percent of the world’s copper (excluding Iran’s reserves)."
Saudi Arabia, the UAE, and Iran are three of the largest oil exporters in the world, and their addition to BRICS would mean the alliance controls 42% of the world's oil supply, according to the report. Although the Organization of the Petroleum Exporting Countries (OPEC) will retain the responsibility of managing the oil market, "an expanded BRICS grouping could be significant for energy markets."
The report said that the major oil and gas producers and importers in the expanded BRICS share a joint interest in creating ways to trade their commodities outside of the G7 financial framework. While the dollar still dominates the global oil trade, more and more energy deals are being transacted with other currencies like the rupee and the renminbi.
"For energy markets, enlarging BRICS is largely symbolic for now—but it is another sign that countries are exploring ways to skirt the U.S. financial system and the reach of the dollar," the report said.
