Africa’s Mineral Wealth Will be Missed Without Collaborative Efforts Among Countries – New Report

Green technologies are heavy on minerals: electric vehicles, batteries, solar panels, wind turbines, and grid systems require cobalt, lithium, copper, manganese, graphite, and rare earth elements.

The International Energy Agency estimates that electric cars utilize six times more minerals compared to traditional petrol or diesel vehicles. A wind power plant demands about nine times more minerals than a gas-powered plant.

As the global shift towards greener solutions accelerates, the rising demand for green technologies and minerals creates opportunities for Africa, which possesses deposits of many of the required minerals.

However, merely having these minerals underground does not ensure the development of industries or shared prosperity. In fact, countries rich in minerals often encounter challenges in reaping economic benefits from mining.

We are researchers focused on how nations build industries and transform their economies. Our recent study, commissioned by the World Bank, investigated how far African countries have progressed beyond the extraction of minerals essential for the energy transition.

We analyzed whether these countries are involved in processing and refining these minerals or producing components for the green technologies that utilize them.

Our study followed a four-step approach. First, we identified the transition minerals present in each African country. Next, we examined trade data to discover which countries export these minerals and their destinations.

Read: How South Africa re-emerged as a mining nation

Third, we assessed where African nations fit into the value chain of green technology. We aimed to understand if they merely extract the minerals and export them raw, or if they refine and process them before sale or even produce end products like solar panels. Lastly, we reviewed national and regional mineral and industrial policies.

Our findings revealed that African nations possess deposits of 41 minerals utilized across bioenergy, electricity networks, infrastructure, batteries, energy storage, electric vehicles, and carbon capture and storage.

These minerals are also in demand for fuel cells and hydrogen, geothermal energy, heat pumps, hydropower, nuclear energy, solar energy, and wind energy.

Nevertheless, most African countries still predominantly export transition minerals in their raw or minimally processed states instead of converting them into higher-value materials, components, and finished goods.

Consequently, African nations have only a minimal presence in the green technology industries reliant on these minerals. This means Africa’s mineral wealth has yet to result in significant industrial activity, well-paying jobs, increased incomes, or widespread improvements in living standards.

We found that national and regional institutions are initiating changes to address this, but most efforts are still in their infancy.

Read: Beneficiation rule: Right goals, wrong methods?

Collective mineral strength, limited value capture

Our research identified deposits, reserves, or production of at least one transition mineral in 48 African countries. South Africa possessed 24 of the 41 minerals; both Nigeria and the Democratic Republic of Congo (DRC) had 14.

Collectively, Africa holds around 96% of global platinum group metal reserves, 77% of phosphate reserves, and 55% of cobalt reserves. Phosphate and cobalt are integral to electric vehicle batteries, while platinum is crucial for technologies that produce and utilize green hydrogen.

However, most individual countries account for only minor global shares. This is significant because small national volumes can hinder a country’s ability to influence buyers, attract substantial processing plants, develop complete supply chains, or compete with established producers in other regions.

Trade data supports these findings. Notably, except for South Africa, Nigeria, and the DRC, most African nations exported less than 1% of each mineral globally. For numerous minerals, including nickel, rare earths, silver, and lithium, Africa’s five largest exporters collectively contributed less than 10% of world exports.

African nations could enhance their standing in mineral markets by coordinating their trade policies rather than acting in isolation. While private firms hold mining licenses, extraction permissions do not always grant an unrestricted right to export these minerals.

This suggests that governments may have some leeway to harmonize trade regulations. How this aligns with companies’ existing rights, and whether it would necessitate their consent, warrants further exploration.

Read:
Are African nations aware of their own mineral wealth?
Africa’s minerals are being exchanged for security

A significant weakness identified in our study is the limited local processing of minerals. This primarily occurs in a few nations such as South Africa, Democratic Republic of Congo, Zambia, and Zimbabwe. The processing that takes place in these countries often involves crushing and concentrating ore rather than manufacturing products from the mineral.

African countries miss out because of this. For instance, Congolese cobalt can be priced at US$5.80 per kilogram at the extraction point. However, after local refining, its value rises to US$16.20 per kilogram, nearly tripling the price.

A green economy reliant on outdated dependencies

Asia (particularly China) stands as the primary importer of 16 minerals from Africa. It accounted for over 30% of those exports on average and was the second-largest buyer of six other green transition minerals.

Our research showed that China absorbed over 40% of Africa’s annual mineral ore exports. This indicates that Africa is following a familiar trajectory: extracting raw materials while other nations transform them into more valuable products.

Read: Strengthening SA-China economic partnerships is crucial

The historical context of Africa, coupled with low levels of industrialization, results in African nations being largely invisible in the value chains of green technology.

From 2017 to 2023, Africa’s global patent share across the examined technologies remained below 0.4%, and its export share was under 1% in every category. Currently, African nations engage in the green economy more as consumers than as producers.

African governments asserting their influence

Our findings also indicated that African governments are revising mining regulations, imposing export restrictions, securing ownership interests, and forming partnerships to derive greater benefits from their minerals. They aspire for increased processing, investment, jobs, and income to remain domestically oriented. However, most actions are taken individually, though some countries collaborate across borders.

Acting independently imposes limitations. Numerous countries lack sufficient supply volumes to sway major international buyers. If a single country pushes for higher rates or local processing, buyers can turn to other sources.

Additionally, many nations struggle with unreliable electricity, unaffordable loans, transportation issues, and a lack of skilled labor necessary for processing minerals and creating components.

Path forward

Africa boasts significant mineral wealth as a continent. Nevertheless, enhanced regional cooperation is essential for African nations to establish industries rather than merely streamline trade with each other, as emphasized in a related study, Integrating Africa: From Threads to Hubs.

Pooling mineral resources, markets, infrastructure, and skills could lower costs and enhance their negotiating power with global corporations. A regional processing hub catering to multiple African nations would also be beneficial for the continent.

To realize this vision, African financial and mineral institutions alongside national governments must converge on shared priorities and consistent guidelines regarding mineral processing and environmental management.

Development finance can play a pivotal role. Regional development banks and other African financiers could assist in funding collaborative electricity, transportation, and mineral-processing infrastructure, while educational institutions and businesses cultivate the skills required in these industries.

Collaborations with foreign governments and corporations should further extend beyond the extraction and export of minerals. They should include commitments to enhance local processing, share technology and expertise, train the workforce, and support local firms in becoming suppliers for emerging green industries.

Gideon Ndubuisi, Assistant Professor of Economics, Delft University of Technology; Elvis Korku Avenyo, Associate Professor, University of Johannesburg; Solomon Owusu, Assistant Professor of Global Economic Policy, Boston University; and Woubet Kassa, Economist, American University

This article is republished from The Conversation under a Creative Commons license. Read the original article.