WILLIAM GUMEDE: Africa needs better critical mineral policies

Critical minerals and rare earth metals offer a once-in-generation opportunity for many African countries to leapfrog their development.

However, African countries are in danger of missing out on the development benefits these minerals offer, in similar ways that they missed the postcolonial opportunity of Africa’s oil and mineral bounty, because most countries were then, and are still, run by corrupt, violent, incompetent and self-interested governments that do not have the welfare of their countries as their objective. Or they have ideologically fundamentalist, nonsensical or captured development policies.

The world needs critical minerals and rare earth metals to transition to clean energy technologies, to manufacture microchips in semiconductors for military applications, and for industrial infrastructure. For example, critical minerals are crucial for building the hardware that drives artificial intelligence (AI).

Critical minerals are commodities, other than fuel, essential to a government’s economy or national security, with a supply chain that is vulnerable to disruption. Whether a mineral is critical is determined to a large extent by a country’s national economic or security considerations.

Rare earths are 17 chemically similar elements critical to the production of hi-tech products.

It is expected that total demand for critical minerals and rare earth metals will rise up to fourfold by 2040. This offers African countries a new growth opportunity in developing and processing these in-demand minerals. While fossil fuels need continuous new supplies in their energy use, and are nonrecyclable, critical minerals are recyclable. Recycling provides additional opportunities for African countries.

GlobalData’s 2024 critical minerals report identified 15 minerals that are important for the world’s transition from fossil fuels to clean energy, with the five most critical being lithium, cobalt, copper, nickel and rare earth elements (REEs), which are used to produce weapons, wind turbines, electronics and other vital products.

Some minerals may not be critical minerals, but they are strategic. They include the five platinum group metals (PGMs) and copper and nickel.

Africa has large quantities of critical minerals and rare earth elements 

Sub-Saharan Africa is estimated to hold more than 30% of the volume of proven critical mineral reserves. According to the UN Council of Trade & Development (UNCTAD), Africa has abundant reserves of critical energy transition minerals such as 55% of cobalt, 47.6% of manganese, and 21.6% of natural graphite. Africa also has large quantities of REEs and the strategic PGMs.

The Democratic Republic of Congo (DRC) accounts for more than 70% of global cobalt output, half the world’s cobalt reserves, 19% of flake graphite supply, and 4% of lithium supply.

SA, Gabon and Ghana collectively account for more than 60% of global manganese production. SA is a key source of REEs and PGMs. SA and Zimbabwe have abundant rare-earth element PGMs. Zimbabwe is the world’s fifth-largest producer of lithium.

Zambia is Africa’s second-largest copper producer. The DRC and Mali hold substantial lithium deposits. Mozambique and Zambia also hold significant critical mineral reserves. Madagascar and Mozambique have significant graphite reserves. Guinea has significant bauxite reserves and other critical minerals. Angola has critical and rare-earth mineral reserves such as copper, cobalt, manganese, and lithium.

Africa predominantly exports raw material and do little processing — in fact the region has done the least processing of minerals of any region.

China dominates critical minerals in Africa

China, which controls 75% of the world’s rare earth deposits, dominates many global supply chains of critical minerals. It has a dominant position in Africa’s critical minerals space. EU research shows that Chinese firms have financial stakes in 18 of the 26 cobalt-producing assets in the DRC and 80% of lithium mines across Africa.

China’s Zijin Mining has a 39.6% stake in the Kamoa Kakula copper mine in the DRC. The Ivory Coast is China’s third-largest supplier of nickel ore. Among the Chinese companies invested in Zimbabwe are Sinomine Resource Group, Chengxin Lithium Group, Yahua Group, Zhejiang Huayou Cobalt and Canmax Technologies. 

New players are rushing into Africa. Other countries are determinedly entering the African critical minerals space — including India, the United Arab Emirates (UAE), Saudi Arabia and Australia. The UAE and Saudi Arabia are trying to diversify their oil portfolios and to manage the global transition to renewable energy and to be on the forefront on the AI revolution — critical minerals has become a key part of their diversifying strategies. The UAE is invested in Zambia, DRC and Angola’s critical mineral sector. 

Saudi Arabia is engaging with Guinea to mine bauxite. It has signed memorandums for investment in mining with the DRC, Egypt and Morocco.

India has been engaging with the DRC, Ivory Coast, Malawi, Madagascar, SA, Mali, Morocco, Tanzania, Mozambique, Zambia and Zimbabwe to secure critical metals partnerships to secure cobalt, nickel, graphite, diamonds, platinum and uranium. 

Almost 170 Australian Stock Exchange-listed mining and other resource companies are operating in 35 African countries, from SA, Namibia, Tanzania and Zambia to Burkina Faso. Australian mining companies are active regarding uranium compounds, manganese and ilmenite (a titanium ore). Australian companies have significant exploration activities in nickel, phosphate, rare-earth elements, iron ore and copper.

Australian mining companies such as Lepidico, Cazaly Resources and Sovereign Metals are active in the lithium sector in countries such as Tanzania, Namibia, Ghana and SA. Australian companies such as Noronex, South32 and Orion Minerals are active in Africa’s copper sector. Australia’s Black Rock Mining has a graphite project in Tanzania. But the Tanzanian government also has partnerships with Australian companies such as Peak Rare Earths, Ecograf and Evolution Energy Minerals to develop critical minerals.   

In recent times leading US billionaires such as Bill Gates and Jeff Bezos, and fund managers Cinctive and BlackRock, have moved into the Africa critical mineral sector. Lifezone Metals, which leads a nickel initiative in Tanzania, has been backed by BlackRock and Cinctive.

KoBold Metals recently raised $537m to explore copper in Zambia. This funding, supported by Gates and Bezos, highlights the growing interest of American investors in African mining. KoBold Metals, a US firm valued at $2.96bn, is among them. It aims to establish a copper mine in Zambia by 2030.

Other American firms making moves in Africa include Lifezone Metals, which trades on the New York Stock Exchange, backed by Cinctive and BlackRock among others. Lifezone leads the Kabanga nickel project in Tanzania, a project set to deliver battery-grade nickel to the US by 2026. In 2024, Australian mining company Syrah secured a loan of $150m from the US government, through the US International Development Finance Corporation (DFC), to invest in the Balama graphite mine in northern Mozambique. 

There has been a rise in new start-ups turning waste into rare and critical metals. Recycling has created a secondary supply of critical metals. The International Energy Agency reports that battery recycling capacity for example is expanding rapidly, with 50% year-on-year growth in 2023. China remains the global leader for material recovery, having a 70% market share. China has announced the establishment of a new state-owned enterprise dedicated to recycling and reusing end-of-life batteries as well as other materials. 

Africa needs a policy change to benefit from minerals   

Africa can use the bounty of critical minerals and rare earth elements as a catalyst to industrialise. However, unless the continent has pragmatic industrial policies, partners strategically with outside partners and manages the transition sustainably, it will lose out, as it has in the postcolonial period on its minerals and oil.   

Corrupt and incompetent governments, and ideological, nonsensical or no-policies, undermine the growth of critical mineral development. In the postcolonial period empowerment, affirmative action and preferential procurement programmes that were captured, benefited only the political elite and marginalised genuine local entrepreneurs. Nationalisation of resources has undermined the development of minerals.

Worse, most African countries have been unstable, under military rule, or run by corrupt and incompetent liberation movements or personal leaders. Policy development, long-term investment and planning are not possible under these circumstances. Currently, of 35 out of 54 African countries that have conflicts, military rulers, violent liberation movements and leaders who make these countries systemically unstable each respectively run a third of them.

Africa needs policy changes that eliminate captured empowerment, procurement and nationalisation programmes. The continent will have to clean up its governance regimes to foster political stability, without which economic development cannot take place.

Very few African countries have had industrial policies that could beneficiate and refine minerals. Most of Africa’s minerals have been exported as raw materials. The region could increase income for critical minerals if it also processed them. Africa has also not exploited recycling opportunities, and has seen its critical minerals waste exported for recycling in China and elsewhere.

African countries need better policies and better partnerships. Mining is expensive, and capacity and capital intensive. Processing is equally complicated. Agreements between Africa and partners must support skills, and genuine local entrepreneurs, not politically connected ones, and infrastructure and local development.                                               

• Gumede is professor of practice in the School of Governance at the University of the Witwatersrand, and author of ‘SA in Brics’.