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.

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