As the world embraces green technology, the demand for critical minerals such as cobalt, lithium, copper, and others is skyrocketing. Electric vehicles and renewable energy technologies like wind turbines and solar panels are heavily reliant on these minerals. The International Energy Agency highlights that electric cars need six times more minerals than their conventional counterparts, while wind power plants use about nine times more minerals compared to gas-fired plants.
Africa, rich in these essential minerals, could potentially benefit from this green transition. However, having these resources doesn’t automatically translate into economic prosperity for the continent.
Research shows that although many developing countries are mineral-rich, they often find it challenging to derive significant economic benefits from mining activities. Scholars analyzing industrial growth and economic transformation in countries have conducted a recent study for the World Bank, looking into how African nations are advancing beyond mere mineral extraction. They evaluated whether these countries are processing, refining, or utilizing these minerals in green technologies.
The study’s methodology involved four main steps: identifying the transition minerals in each African nation, analyzing trade data to determine mineral export destinations, assessing the countries’ involvement in the green technology value chain, and examining mineral and industrial policies at national and regional levels.
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Africa hosts 41 critical minerals essential for various green technologies, yet most countries export these in raw or slightly processed forms, instead of producing higher-value materials and products. This limits their presence in the industries dependent on these minerals.
While some African institutions are making strides to change the status quo, most efforts are still in nascent stages.
Mineral Resources and Economic Impact
A study reveals that 48 African countries have notable mineral deposits. South Africa leads with 24 of the 41 minerals, while Nigeria and the Democratic Republic of Congo (DRC) each have 14. Collectively, Africa holds substantial reserves of globally significant minerals like platinum, phosphate, and cobalt, crucial for technologies such as electric vehicle batteries and green hydrogen production.
Courtesy World Bank.
Despite this collective strength, individual countries often hold minimal shares of these minerals globally, making it challenging to leverage their resources for significant economic influence.
Trade data confirms that most African nations, excluding a few like South Africa and the DRC, contribute less than 1% to global mineral exports. The continent’s leading exporters for minerals such as lithium and nickel supply less than 10% of the global market collectively.
To enhance their global position, African countries could potentially coordinate trade policies, leveraging their combined resources. However, the feasibility and implications of this approach need careful consideration.
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A major challenge identified is the limited local processing of minerals, predominantly occurring in countries like South Africa and the DRC. The inability to add value domestically results in lost economic opportunities. For instance, refined Congolese cobalt could fetch nearly three times the price of unrefined ore.
Dependence on External Processing
Asia, particularly China, is a major consumer of African minerals, importing over 40% of Africa’s annual mineral ore exports. This trend mirrors historical patterns where Africa exports raw materials, with value addition happening elsewhere.
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Due to limited industrialization, African countries have a minimal footprint in global green technology value chains. From 2017 to 2023, Africa’s global patent and export shares in these technologies remained under 1%. At present, African countries participate more as consumers rather than producers in the green economy.
Efforts to Shift Dynamics
African governments are revising mining laws, restricting exports, and forming partnerships to retain more value from their minerals. While many are acting independently, some are collaborating across borders to enhance their influence in mineral markets.
The challenges, however, are numerous. Individual countries often lack the volume to negotiate better terms with international buyers. Moreover, issues like unreliable electricity, lack of skilled labor, and inadequate infrastructure hinder local processing and component manufacturing.
Path Forward for Africa’s Green Economy
Collective regional cooperation could significantly bolster Africa’s position in the global mineral market. A comprehensive strategy, as proposed in Integrating Africa: From Threads to Hubs, suggests pooling resources, infrastructure, and expertise to lower costs and enhance bargaining power with global firms.
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To realize this vision, African financial and mineral institutions must align on processing standards and environmental management. Development finance could support shared infrastructure, and partnerships should extend beyond extraction to include local processing, technology sharing, and workforce development.
Original Story at theconversation.com