Mining for energy: Africa must seize the green moment

The continent should grasp the chance to develop its green minerals to its own advantage.

Published on 10 February 2023 in ISS Today

By

Peter Fabricius
Consultant, ISS Pretoria

Africa has a once-in-a-lifetime opportunity to boost its development through the massive global demand for its fabulous trove of the minerals the world needs to power a green energy transition.

But will Africa seize the opportunity or let it slip – either by failing to exploit the rare minerals fully, or allowing them to be exploited by others with little benefit for Africa’s people? This was a key theme of the African Mining Indaba 2023 in Cape Town this week.

Africa has significant percentages of most, if not all, the essential minerals and metals needed to manufacture batteries for electric vehicles and other technologies vital for a green energy future. Global demand far outstrips supply, creating a massive potential sellers’ market. The International Energy Agency has predicted that demand for most minerals essential to the clean energy transition will increase by a factor of four to six.

‘For some minerals, the increase will be exponential. By 2040, graphite demand will increase by 25 times, and lithium by 42 times,’ United States (US) Under Secretary of State for Economic Growth, Energy and the Environment Jose Fernandez told the indaba.

Global demand for minerals essential to the energy transition will increase by a factor of four to six

He warned African mining nations not to miss out on this potential bonanza. To help them avoid doing so, the US launched the Mineral Security Partnership (MSP) with 11 other developed nations last year. The MSP aims to ensure its miners maintain high standards of environmental and social protection and governance, and invest all along the supply chain so that African countries derive the greatest benefit, Fernandez said.

The MSP would of course give its partners access to the critical minerals. Fernandez acknowledged that the partnership was not ‘altruism.’ So beneficiation or value addition was key to the MSP and central to the indaba’s discussions.

Beneficiation has been the buzzword of African mining discourse for a long time. Its alluring proposition is that African countries should first add value to their own minerals instead of just exporting raw materials and earning relatively little for it – as they largely do now. They should process and sell the products globally at much higher prices, thereby redressing Africa’s unbalanced trade, creating jobs and boosting growth.

But that has largely remained a dream. Now, the global surge in demand for ‘green’ minerals to achieve global net-zero carbon emissions by 2050 has injected new life into the dream.

The current emblematic event in African mining is the Democratic Republic of the Congo (DRC) and Zambia joint venture to make batteries for electric vehicles in the DRC’s mineral-rich Katanga province. The two countries have significant copper, cobalt and lithium reserves – three key components of these batteries.

The DRC-Zambia venture is a litmus test of African countries’ ability to seize the net-zero opportunity

The US is backing the project. What that might entail is not yet clear, beyond a US statement that it would help create a level playing field for the private sector in the project. The DRC-Zambia venture will be a litmus test of African mining countries’ ability to seize the net-zero opportunity.

On the face of it, the project is hugely ambitious and raises scepticism about proper beneficiation. The DRC and Zambia have large mineral reserves underground and experience in extraction, but lack expertise in transforming the raw materials into sophisticated products like electric vehicle batteries.

African organisations also support the joint venture and hope to extend it across the continent. As the African Development Bank noted at the indaba, it is developing the Green Minerals Strategy to help countries optimise and develop battery and electric vehicle value chains in Africa. Its partners are the African Union (AU) Commission, the African Legal Support Facility, United Nations (UN) Economic Commission for Africa, UN Development Programme, African Finance Corporation and the African Export-Import Bank.

When asked in a panel discussion if the project was ‘feasible’, leaders of the Zambian and DRC industries insisted it was. They acknowledged their countries’ lack of skills, infrastructure and capital but said these were being addressed, for example through collaboration between universities to provide training.

Much remains to be decided about the project, including the critical question of who will manufacture the batteries. Chali Mwefyeni, Zambia National Commercial Bank’s Chief Commercial Officer, told ISS Today that feasibility studies were being done to provide answers. He thought a public-private partnership would likely make the batteries, but the private sector should retain ultimate control.

African development of green minerals offers an opportunity to de-risk these minerals’ supply chain

The Atlantic Council’s Peter Pham told another panel that the high demand for critical minerals presented Africa with unique economic and geostrategic opportunities, which it should seize. Pham said the green energy transition would be impossible without African minerals, including copper. He noted that a unit of wind-powered energy required five times – and a unit of solar power 25 times – the amount of copper that a unit of more conventional energy needed.

Pham implicitly explained the US interest in supporting the DRC-Zambia battery project (and perhaps the MSP). He said for the US – and one could add other Western countries – African development of green minerals offered a welcome opportunity to de-risk these minerals’ supply chain.

He noted that Amos Hochstein, US President Joe Biden’s energy adviser, told the Mining Indaba that for any one country to dominate the supply chain of a critical mineral presented a high risk. Hochstein was likely referring to China now processing some 80% of the world’s cobalt – most of it from the DRC, which has about 70% of the world’s reserves.

So it makes sense for the US to support the DRC’s efforts to beneficiate its cobalt. That keeps the strategically important mineral accessible. The same goes for other critical minerals.

Should Africa care either way? Probably. Although the US is looking to its strategic interests, there is mutual benefit, and it isn’t insisting that its companies get a monopoly. If beneficiation works, African companies and governments get a greater share of their minerals’ value. And the supply chain is diversified beyond China.

Peter Fabricius, Consultant, ISS Pretoria

Image: © Shutterstock

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