As the energy transition gathers pace, the need for access to the essential raw materials which underpin it, is also accelerating:

• An electric car needs six times more rare earth minerals than a conventional vehicle;
• An onshore wind plant needs nine times more materials than a comparable gas facility;
• Between 2017 and 2022, the energy sector drove a tripling of global demand for lithium, whilst demand for cobalt and nickel rose by 70% and 40%[1] respectively;
• Between three to 6.5 billion tonnes of transitional minerals will be needed over the next three decades if the world is to meet its climate goals[2].

The current and future global demand for transitional metals and minerals offers a potentially huge economic opportunity[3]. This is particularly the case for Africa, where more than 50% of the world’s cobalt and manganese, 92% of its platinum and significant quantities of lithium and copper are to be found. Almost all of the continent’s current output is presently shipped as ore for processing in third countries, meaning the potential economic benefit of this enormous mineral wealth has not filtered through to the real economics in its African source countries[4].  Africa exports roughly 75% of its crude oil, which is refined elsewhere and re-imported as (more expensive) petroleum products; and exports 45% of its natural gas, whilst 600 million Africans have no access to electricity (approximately 53% of the continent’s population)[5].

A number of African governments have expressed their determination to avoid repeating the ‘resource curse’ mistakes of the past, by using the continent’s natural resources to drive domestic economic growth, while creating meaningful domestic job opportunities, rather than exporting them and the consequent economic growth elsewhere.  This approach has led a number of African countries to impose export restrictions on raw minerals; promote domestic processing; and demand that agreements with third countries promote technology transfers and improve domestic processing capacities and workforce skills.

Sustainable use of transition minerals

A resolution to promote equitable benefit-sharing from extraction was recently presented at the UN environmental assembly in Nairobi calling for the sustainable use of transitional minerals[6].  The Resolution, which was supported by a group of mainly African countries including the DRC, Senegal, Burkina Faso, Cameroon and Chad, was described as being ‘crucial for African countries, the environment and the future of [African nations’] populations.”

A number of African countries have already taken steps to protect their natural resources and move up the processing value chain[7].

Nigeria

Nigeria banned the export of raw-ore in 2022 to (in the words of its Natural Resources Minister) end the “plundering (of) the continent for raw materials” by incentivising local processing or refining before exporting and “…bring industry to Africa so that our people can be employed.”

Namibia and Zimbabwe

Zimbabwe banned exports of unprocessed lithium ore in December 2022. Namibia followed suit in June 2023 – a ban which is of particular concern to the EU, coming just eight months after the EU signed an MoU with Namibia aimed at securing access to rare earth minerals.

Ghana

In February 2024, Ghana’s President announced a series of measures to extract greater value from its natural resources, including:

• the construction of a refinery dedicated to processing locally-produced manganese;
• a prohibition on the export of raw bauxite[8] (following Indonesia’s 2023 bauxite export ban) lithium and iron ore;
• the prioritization of Ghanaian investors in acquiring Newmont Corporation’s Akyem gold mine[9] and Atlantic Lithium’s Ewoyaa lithium project;
• the creation of a 400-kilogram capacity gold refinery.

Botswana

In 2023, Botswana renegotiated its mining rights with De Beers to increase the share of rough stones it receives and create a dedicated diamond fund of USD75M to be used for investment in “additional value to the Botswana economy”.[10]

The Sahel

Since 2020, there have been coups d’états in Sudan, Mali, Burkina Faso, Guinea, Niger, Chad and Gabon. These seven countries are important sources of gold[11], uranium[12], bauxite[13], manganese[14] and iron ore.

• After the 2020 coup, Mali’s President created a new mining code which increased potential state-ownership of new projects to 35% from 20%.
• After the 2021 coup in Guinea the military began pressing international mining companies to invest more in national mining operations; introducing more demanding local content requirements; and pushing bauxite miners to refine their output locally. 
• In Niger, the junta imposed a moratorium on all State export contracts, with the intention of reviewing them to ‘improve their commercial fairness’ – a provision which includes pegging prices of exported minerals to trading prices quoted on international bourses.

Geopolitics

Political uncertainty often complicates operating conditions for international mining companies.  Foreign mining companies are often portrayed as agents of foreign states, which can create difficulty in renewing contracts or obtaining permits.

Russia has leveraged (possibly fomented) insecurity in the Sahel, exchanging military backing and security support for minerals and encouraging the expulsion of Western troops[15]. Russia’s willingness to undertake such transactional deals is only likely to increase the importance of its role in Sahel countries, whilst the growing links between China, Russia and Iran present serious security issues for Western governments – for example with regards to access to Uranium[16].  This in turn may increase the complexity of operating in those countries as greater Russia involvement in Africa brings with it increased political risk.

African Solutions

The understandable desire of African governments to avoid the “resource curse” (by restricting or banning mineral exports) and move up the value chain (by boosting domestic processing) could have unforeseen consequences.  Foreign mining companies, whose expertise is arguably key to commercial success, will demand certainty about: the presence of mineral processing infrastructure (including freight and port facilities); a stable electrical supply; a battery value chain; reliable legal frameworks (including ESG protections); and sound financial management, ensuring effective use of tax revenues. Without those reassurances and the accompanying infrastructure, export bans could have a chilling effect on foreign investment.

The African Union is developing an African Green Minerals Strategy, which aims to improve mining regulation and institutions, and build a more attractive investment environment.   Some African countries have already taken steps to develop their domestic processing expertise – in 2022 the DRC and Zambia signed an agreement to set up special economic zones in both nations for the development of EVs and batteries, backed by private and public funding in a bid to begin the shift from exporting to domestic processing.

The EU has begun to recognize it has an obligation (and a need) to act in this space to seek alternative mineral trade partners to China and Russia (and avoid a risk of supply disruption) and to help African countries benefit from their own raw materials.  In March 2023, the EU unveiled in its Critical Raw Materials Act, which aims to make the bloc less dependent on single suppliers by boosting EU mineral industries as well as offering African supply countries a more equal contractual footing through long-term raw materials and value chain partnerships.

International Support

A recent report[17] by the United Nations Conference on Trade and Development noted:

• the potential of African Nations’ mineral wealth to enable them to be key suppliers of automotive parts and components and encouraged them to make deals with automotive and battery producers to acquire technology and knowledge, while engaging in domestic processing to “… avoid being locked into the provision of ‘just’ raw materials, which results in very low-value integration into global supply chains.” 
• the importance of “equal terms of mining contracts and policies [in] catalysing lateral linkages between large-scale mining and local productive industrial development”;
• the important role of national incentives and regional cooperation in helping domestic companies gain competitive advantage in the mining sector.

Conclusion

Protectionism is on the rise around the world as the post-second world war political and economic consensus breaks down. Alongside this trend, the energy transition has unleashed a new scramble for green resources.  These two factors come together with particularly noticeable effect in Africa.  The collision of protectionism and the increasing need for access to green resources will impact most parts of the economy.  But it will affect mining companies most of all. The stakes are high, with the world’s major powers competing for resources and influence.  The outcome of this intense competition for resources will determine whether the energy transition is ultimately successful and the worst ravages of climate change can be avoided.  But to succeed, the energy transition must be a just transition – one from which African countries must benefit.    Resource nationalism without the necessary legal, financial and infrastructure investment could be counter-productive for African nations.  But done right, it could attract investment, training, jobs and infrastructure in a way which is genuinely beneficial for African nations and their populations.

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[1] IEA report July 2023

[2] https://www.energy-transitions.org/bitesize/its-in-the-charts-materials-needed-to-deliver-the-energy-transition/#:~:text=Between%202022%E2%80%932050%2C%20the%20energy,electric%20vehicles%20and%20other%20technologies quotes 6.5 billion tonnes between now and 2050.  The UNEP quotes 3 billion tonnes.

[3] Bloomberg estimates the global market for electric vehicles alone estimated to be worth $7 trillion by 2030

[4]The DRC produces 67% of the world’s cobalt, but remains one of the world’s poorest countries, whilst China refines 73% of all cobalt – along with 40% of copper, 59% of lithium and 67% of nickel.

[5] UNCTAD report titled “Commodities at a glance: Special issue on access to energy in sub-Saharan Africa”

[6] https://www.un.org/en/nairobi-unis/press-release-un-convened-panel-address-equity-sustainability-and-human-rights-across

[7] Africa Development Forum report, May 2023.

[8] Ghana’s bauxite reserves are approximately 920 million tonnes.

[9] Ghana was Africa’s largest gold producer in 2023 almost all of which was exported for processing. The President was explicit in his determination to apply the lessons of gold mining to the production and processing of green minerals.

[10] De Beers press release dated 3 July 2023

[11] According to S&P Global Commodity Insights, these seven countries were responsible for 7.2% of global gold production in 2022.

[12] Ibid: Niger produced 4.1% of the world’s uranium.

[13] Ibid: Guinea produced 22.6% of the world’s bauxite, an aluminum ore.

[14] Ibid:Gabon accounted for 23.0% of global production of manganese.

[15] https://www.theguardian.com/us-news/2024/mar/22/russia-niger-us-security-pact

[16] https://www.lemonde.fr/afrique/article/2024/05/10/l-uranium-du-niger-au-c-ur-de-negociations-clandestines-avec-l-iran_6232514_3212.html

[17] Economic Development in Africa Report August 2023