Africa’s industrial revolution — one mineral at a time

In the fourth industrial revolution Africa is not a mere spectator, it is a significant contributor to the swift technological progress of the 21st century. It is playing a pivotal role by supplying essential critical minerals that power our smartphones, electric vehicles, precision-guided missiles, solar panels and so much more.

However, this contribution has sparked debate, as some argue that certain mineral-rich African countries, such as the Democratic Republic of Congo and Zambia, are paying a high human and environmental price for this global demand without reaping the full benefits.

Holding more than half of the world’s cobalt reserves, 46% of manganese and 21% of graphite, Africa plays a crucial role in the critical mineral supply chain needed for the transition to a low-carbon world. To avoid being relegated to the sidelines of the clean energy technology supply chain, these African nations must undergo successful transitions into high-value manufacturing activities by building their energy infrastructures so they can support processing and refining.

The transition to greener, lowcarbon technologies is fuelling growing demand for vital minerals such as cobalt, graphite, lithium and rare earth elements. The 17 rare earth elements are characterised by challenging extraction and separation processes owing to their similar chemical structures, and are indispensable components in more than 200 products spanning a broad spectrum of applications.

This demand is projected to surge nearly 500% by 2050, offering a strategic opportunity for productive investments that can drive domestic and regional industrial transformation. Rather than succumbing to resource exploitation and engaging in low-value chain functions such as mining and extraction, African countries must seize the opportunity to shape their own development narrative.

GREEN MINERALS HUB

The Paris Agreement unveiled a crucial avenue for Global South support, known as the “technology mechanism”, a topic deliberated on at the Bonn Climate Change Conference of June 2023. This mechanism holds the promise of aiding geo-economically vulnerable nations, particularly those in Africa, in integrating them into global green technology value chains.

The objective is twofold: facilitating enhanced adaptation to climate change and bolstering efforts to mitigate its adverse effects. In this endeavour the UN, AU and various multilateral bodies and development agencies have championed policies and initiatives aimed at positioning Africa as a hub for green minerals, signalling a concerted effort to catalyse sustainable development across the continent.

But where do we start? Sulemanu Koney, CEO of the Ghana Chamber of Mines, emphasises the need to turn mining policies into actionable objectives, particularly attracting investments through Africa’s local capital markets for mineral exploration. Analysing global value chain trends, Africa’s primary participation is in providing unprocessed raw materials through forward linkages.

To ascend to higher value-added segments, African nations must engage in high-value manufacturing activities, leveraging their concentration of critical mineral resources to negotiate fair value in global value chains. This offers an opportunity for these countries to capitalise on the global energy economy by crafting industrial policies that foster development, diversification of local production and integration into downstream segments of clean energy technology manufacturing value chains.

INVESTMENT GAP

Despite Africa’s central role in the global green energy transition, since it holds a significant share of critical minerals essential for clean energy technologies, the continent still suffers from big investment gaps, receiving only about 2% of global investment in renewable energy.

Mineral resource exploitation remains a crucial aspect of African development and global trade networks, offering opportunities to drive industrial development and structural transformation on the continent, necessitating the creation of horizontal and vertical linkages across firms. Private sector investments from developed countries are crucial for mineral exploration.

There is a significant presence of developed nations, especially China, in African mining operations. China’s dominance in critical minerals, with control of 85%-95% of the mineral supply chain in countries such as Gabon, Ghana, Zambia and Zimbabwe, emphasises the necessity for strategic considerations. Nevertheless, global mining giants including BHP, Rio Tinto, Anglo American, Xstrata and Barrick, boasting an estimated combined value of $335bn, are actively tapping into abundant mineral resources across the continent.

With adequate capital investment and a future-orientated long-term vision, African countries have the potential to develop internal processing and manufacturing capabilities, thereby expanding their high-value supply chain.

UPSTREAM TO DOWNSTREAM

Africa’s natural capital offers an opportunity for the continent to reposition and transform its production activities, especially in medium- and high-technology sectors. This potential is realised by attracting investments in the extraction and processing of resources, along with fostering technology-intensive downstream sectors crucial for domestic and regional industrial transformation and development.

Three key factors influencing critical minerals industry development in Africa centre on governments recognising the economic value for regional industrialisation, impartial negotiation of mineral rights conditions, and effective management of geopolitics through global alliances. At the mining ownership level African governments must strategically align with partners supporting domestic production of critical minerals, fostering a win-win situation for Africa’s diversification into mediumhigh tech industries and job creation.

The International Energy Agency envisions Africa as a pivotal resource centre in future, predicting a surge in demand for key minerals such as nickel, cobalt, graphite (20 times), lithium (40 times) and rare earth elements (four times). These elements are essential for developing and deploying the clean technologies crucial for mitigating climate change impacts and transitioning to a sustainable energy landscape, a goal unattainable without resources from key regions in Africa.

AFRICAN NATIONS MUST ENGAGE IN HIGH-VALUE MANUFACTURING ACTIVITIES