Enhancing value through local mineral chains
The World Bank posits that to meet the rise in global demand and avoid the worst impacts of climate change, the production of these minerals will need to increase by 50 percent by 2050.For mineral-rich Africa, a unique opportunity has emerged for countries to capitalise on increased global investment to stimulate sustainable economic growth. However, to maximise the value of the continent’s mineral industry, focus needs to be redirected towards local value chains.
Africa is home to over 30 percent of the world’s mineral reserves, with almost every single country on the continent rich in at least one critical mineral — resources which are essential for the development of green energy technologies such as electric vehicles, solar and wind installations, batteries and renewable power systems. The Democratic Republic of Congo (DRC) hosts over 70 percent of the world’s cobalt production; Zimbabwe holds the world’s largest reserves of hard rock lithium; Mozambique is the world’s third-largest producer of graphite; while South Africa accounts for 75 percent of the world’s supply of Platinum Group Metals. Additionally, Namibia is rich in uranium ore; Gabon in manganese; and Guinea in bauxite, while Zambia is the largest exporter of unrefined copper.
The resources are there, but the value? That comes with the market. Africa stands to earn a great deal more from its mineral resources through the development of competitive value chains. Downstream investments unlock job opportunities, advancements in infrastructure and skills transfer, and are poised to establish Africa as a global hub for critical minerals. Economic benefits such as the development of associated industries and strengthened fiscus will shortly follow, enabling countries to drive long-term and sustainable economic growth.
While some African countries have seen substantial success in the extraction of critical minerals, domestic markets are modest at best. Apart from South Africa, which invested heavily in beneficiation in the late 1990s, many countries continue to export the majority of their raw mineral resources.
Current estimates show that up to 70 percent of mined minerals are exported to Europe or Asia for refining. However, many countries are eager to reserve this trend in an effort to enhance value addition, stimulate industrialisation and beneficiation, and ultimately, advance economic growth.
To this effect, several policies have been implemented aimed at supporting the development of the domestic mineral value chain. Zimbabwe implemented a national ban on the export of unprocessed lithium resources earlier this year, with Namibia implementing a similar ban just six months after. More recently, Ghana announced the approval of the country’s Green Minerals Policy, effectively banning the exportation of unprocessed mineral resources in an effort to retain value and bolster domestic supply chains.
Unfortunately, these policies will fail to bear fruit unless backed by sizeable investments in processing and manufacturing facilities. Critics have also posited that without clear strategy and diversified ownership structures in place, these policies could actually serve as deterrents to foreign investment while creating export bottlenecks —CMA/CNBC Africa
