Rules of entry: Cooperative pathways for Europe and Africa on critical minerals

• Surging global demand for critical raw materials has strengthened the bargaining power of resource-rich African countries. They are introducing new local content obligations for foreign mining companies that wish to operate in their territory, such as requiring the use of local goods and hiring local workers.
• The EU needs a secure and stable supply of critical minerals from Africa to power its green transition. However, its approach to this lags behind major players such as China and Gulf states, especially regarding investments in mining and processing ventures.
• European leaders should deepen their diplomatic efforts to encourage African countries to take a regional approach to imposing local content obligations. Greater economies of scale and cross-border activity would help improve resource-driven economic diversification in Africa.
• Europeans can distinguish their offer by providing grants or subsidies to EU-based private sector mining companies to invest in African STEM education and innovation, including establishing mining research centres.
• Europeans can also set themselves apart by supporting enterprise development strategies that include targeted training on competitiveness and accessing markets, obtaining financing, and other business development services.

Mineral geopolitics: A golden opportunity for African industrialisation

Africa has become a hotbed of geopolitical competition over critical raw materials (CRMs). These are the essential ingredients that will power tomorrow’s economies, found in solar panels, wind turbines, electric vehicle batteries, and more. Many outside players are now seeking to access Africa’s prized resources, including traditional partners such as the United States, the European Union, and China, and emerging economies such as the Gulf states, Turkey, and India. In the past two years, private and state-backed companies from these countries have snapped up new mining rights, secured concessions, and unveiled plans for mineral processing plants, refineries, and battery production facilities right across the continent.

Surging global demand for CRMs has handed some African governments newfound bargaining power. Resource-rich African countries now oblige aspiring partners to accept demands that they hope will drive domestic innovation and productivity and help build sustainable industrialised economies. Many states have already brought in export bans on unprocessed ores and introduced local content requirements, which mandate the use of domestic goods and services in value-added processing and guarantee a certain proportion of domestic ownership. African policymakers’ goal is to encourage the benefits of these CRM investments to be felt in other sectors of the economy. They aim to retain more wealth within their countries and raise Africa’s global share of value-added manufacturing well above its current level of just 2 per cent.

With such requirements becoming a non-negotiable part of the African offer, Europeans – along with their competitors – must comply with Africa’s fast-changing regulatory landscape. At the same time, the EU remains almost entirely reliant on China for its supply. As geopolitical competition deepens, the bloc is under pressure to de-risk by securing alternative sources. Yet European plans are falling short in their ambition to work with the private sector in African countries to build refining and smelting facilities and embark upon downstream projects. The EU intends flagship initiatives such as the Lobito Corridor to act as a counterpoint to Chinese influence. Some new infrastructure has resulted from European efforts. But this type of initiative reinforces a ‘mine-to-port’ narrative of an extractive relationship that is unappealing to African decision-makers. From their perspective, the geopolitical dilemmas preoccupying Brussels or Beijing are of little interest. Their wish is to form strong partnerships with whoever is willing and able to help their countries industrialise. African governments will leverage any and all opportunities presented by the CRMs boom. This gives the EU and its member states the chance to secure a more sustainable foothold than they have so far achieved.

This policy brief argues that meeting local content requirements is critical to unlocking the potential of the EU-Africa partnership. It proposes ways to make these obligations work within the EU-Africa mining partnership. The paper shows how European firms can cooperate with African countries on local content obligations both to foster local industrialisation for Africans, and secure access to CRMs for Europe in a way they have so far struggled to do. Specifically, it identifies five challenges within existing EU-Africa CRM relationships and suggests ways for Europeans to solve these to the benefit of both sides. It further argues that the entrenched presence of China in many parts of the CRM value chain across the continent means that Europeans cannot ‘compete’ directly – but that they can secure access of their own, and make some attractive offers that other powers are unable or unlikely to make.

About the author:

Theophilus ‘Theo’ Acheampong is a visiting fellow with the Africa programme at the European Council on Foreign Relations, where he researches Africa’s role in the global energy transition amidst increasing geopolitical competition.

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