The security of critical mineral supply chains is strategic for many countries due to the expected growth in demand driven by the uptake of clean energy technologies around the world.

Africa possesses significant reserves of the minerals that are essential for batteries, solar panels and other green tech that will underpin the energy transition from fossil fuels to renewables. Africa’s mining industry, however, remains largely structured around a “pit-to-port” model that channels mineral ores elsewhere for processing. The inaugural Critical Minerals Africa conference in Cape Town this month explored how this picture could be changed.

The security of critical mineral supply chains is strategic for many countries due to the expected growth in demand driven by the uptake of clean energy technologies around the world.

In its 2023 Global Risks Report, the World Economic Forum highlighted the risks of ineffective climate action induced by a lack of global cooperation to facilitate flexible mineral supply chains. This could potentially lead to a resource crisis, given that the demands of the energy transition require the availability of certain critical minerals to be scaled up significantly.

Dominant China

Another important factor that has driven geopolitical concerns over critical minerals is the dominant position of China in the production and processing of many of these minerals.

Many countries and regions, notably the US and the European Union, have belatedly come to appreciate their strategic vulnerability to future disruptions in supply chains dominated by China. In September this year, the EU Parliament endorsed the Critical Raw Materials Act, while in the US, the American Battery Minerals Initiative and the Inflation Reduction Act also seek to support enhanced access to critical minerals and incentivise local production of green technologies.

Australia, Canada, India and the UK recently published critical mineral strategies. The Minerals Security Partnership is a collaboration of 13 countries and the European Union to catalyse public and private investment in responsible critical minerals supply chains globally.

Speakers from the US, UK and Europe at Critical Minerals Africa placed great emphasis on partnerships and win-win solutions for Africa, noting that Africa’s calls for more processing and value addition on the continent were being heard loud and clear.

Nevertheless, there are some difficult realities behind the rhetoric — the Critical Raw Materials Act foresees 10% of Europe’s critical minerals demand being supplied by local production and a further 15-20% to be sourced through recycling, which means the remaining 70-75% will have to be imported from elsewhere.

Targeted policies needed

If Africa is to successfully exploit its critical mineral endowments, it will have to navigate a complex geopolitical environment, manage important policy trade-offs and foster regional cooperation to strengthen the developmental impacts of the mining sector on the continent.

Africa’s mineral-rich economies could benefit greatly from the increase in demand for critical minerals such as cobalt, lithium, graphite and manganese, but realising this ambition would require targeted policies that focus on developing domestic processing capacity and supporting socially and environmentally responsible mining.

Minerals processing typically requires large amounts of electricity, which is unavailable or unreliable in many African countries. In addition, it is often not economically feasible to localise all segments of a mineral supply chain in a single country due to a lack of economies of scale. While these challenges are significant and have hampered earlier efforts to promote mineral value addition on the continent, they are not insurmountable. 

One way to overcome these challenges would be to cluster production through special economic zones and industrial parks such as the one planned in the landmark agreement signed between Democratic Republic of the Congo and Zambia earlier this year. Promoting the development of regional value chains is essential to foster regional collaboration and support economic diversification.

It is within this context that the African Green Minerals Strategy (currently under development) can play a pivotal role in leveraging Africa’s mineral resources to the benefit of its citizens.

Social and environmental challenges

While critical mineral wealth has the potential to promote resource-led industrialisation in many African countries, there is also the likelihood that a substantial increase in demand for these minerals will unleash a wave of new social and environmental challenges. Many of the minerals crucial to the energy transition are concentrated in countries that have struggled historically with fragility, weak governance and rent-seeking behaviour in the mining industry.

Furthermore, a recent report by S&P Global on the nexus of critical minerals and biodiversity shows that a significant portion of mining for critical minerals is taking place within key biodiversity areas.

A failure to properly address these emerging environmental and social disruptions could foster a justified attitude of hostility towards the mining of these minerals, thereby undermining the broader energy transition.

These environmental and social challenges must be set against the fact that the transition to a net-zero economy will be minerals-intensive and therefore place a large amount of pressure on the mining industry to secure the significant quantity of minerals needed to facilitate the energy transition.

How policymakers respond to these social and environmental challenges will ultimately determine whether the supply of critical minerals serves as a catalyst or a brake in the energy transition. Addressing this will require deepening and updating responsible mineral stewardship frameworks that manage the risks of an increased demand for critical minerals mining in a transparent and accountable manner.

Difficult choices

There is a further challenge — China’s dominance of green-tech value chains has come about because it has been able to drive down costs. Diversifying these value chains away from the least-cost producer, whether through policy carrots (such as subsidies) or sticks (several African countries have already placed restrictions on the export of unprocessed critical minerals), will have impacts on price, which in turn may dampen the competitiveness and uptake of renewable energy projects and electric vehicles. This is not good news for the global effort to decarbonise and address climate change.

Difficult choices lie ahead, but a clear message from Critical Minerals Africa was that the region does not have to accept its position as a source of unprocessed minerals for other major markets.

Partnerships are being formed, investments made and policies adjusted to reposition the continent within global supply chains — it is essential, however, that governance frameworks are strengthened to ensure that these efforts don’t come at the cost of the continent’s ecosystems and its people.

African governments will need to work in partnership with the private sector, civil society and academia to develop a new social contract that not only fosters mineral-led industrialisation on the continent, but does so in a way that demonstrates Africa’s ability to play a leading role in the global energy transition.

As the African proverb reminds us: “If you want to go fast, go alone. If you want to go far, go together.” 

Research by Adrian Joseph

The views expressed in this publication/article are those of the author/s and do not necessarily reflect the views of the South African Institute of International Affairs (SAIIA).