A boom in Africa's transition minerals - those minerals that are used in technologies linked to the transition to renewable energy - is coming but some resource-rich African countries experienced only limited benefits from the continent's last commodity boom.
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These are some of the key messages in a new report, How Can Africa Make the Most of its Transition Minerals? A pledge for enhancing value addition for development and prosperity September 2024, released by the civil society network Publish What You Pay (PWYP), on September 5. The minerals used in technologies linked to the transition to renewable energy include minerals used to make renewable energy technologies, as well as those needed to help existing technologies (such as motor vehicles) to run on electricity.
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As noted, for things to be different this time, resource-rich African countries need to change their approach to natural resource management. Other key messages are that: poor governance has led many countries to be worse off as a result of possessing natural resources in the past; transparency and accountability around revenue management, anti-corruption and environmental protection are paramount; and that the impacts of transition mineral mining on the environment, society and human rights can be severe in some cases.
The report states: "Demand for many of these minerals is already strong and a source of exports for Africa. In 2022, Africa exported around $29 billion in transition mineral products.
"From 1995 to 2018, transition minerals and associated products accounted for 23% of Sub-Saharan Africa's total exports. In 2022, countries around the world reported sourcing $55 billion in transition minerals (and metals derived from them) from Africa. And global demand is expected to increase further as the energy transition accelerates."
Even based only on governments' current stated policies, demand for key transition minerals that Africa produces is expected to rise rapidly to 2050. If governments go further in climate mitigation than current policies and, for example, meet their announced emissions reduction targets, it is noted, demand for transition minerals would be significantly greater.
As noted, the last major boom in demand for (and prices of) the commodities that the continent produces took place from 2004 to 2014, linked to the rise of China and that country's rapidly increasing demand for raw materials. In spite of higher government revenues, it is noted, some of sub-Saharan Africa's resource-rich countries did not effectively invest in diversifying their economies or laying the groundwork for sustained economic growth. As a result, after the commodity boom ended, these countries experienced slower growth than the rest of sub-Saharan Africa.
The report notes that Africa is an important supplier of transition minerals to the world yet the continent is stuck at a relatively low level in transition mineral value chains, where it processes some of its minerals but is largely absent from the manufacturing of many technologies linked to clean energy. As a result, the continent may be missing out on a key opportunity to support inclusive growth, create jobs and reduce poverty.
To have the best chance at seizing this opportunity, it is noted, African countries will need to apply the principles of effective industrial policy - including being strategic about which parts of the value chain they try to develop and weighing the costs and benefits of different types of government intervention.
The report recommends that African countries should, among others, develop strong policies and appropriate regulations to encourage value addition of their transition minerals or greater participation of national companies in supplying mining companies.
"But they should weigh this against other opportunities to promote new businesses. African countries should prioritise the opportunities with the greatest chance of delivering the widest long-term economic benefits."
It is also noted that development partners (countries and institutions that provide aid to or trade with Africa) should ensure that their efforts to acquire transition minerals (whether processed or otherwise) from Africa do not contribute to negative side-effects - such as the suffering of local communities and, or, destruction of the environment in mining or mineral processing areas.
"In addition, they should do their utmost to ensure that workers in transition mineral value chains and affected communities receive a fair share of economic benefits created by them."
It is emphasized that countries to which Africa sells its transition minerals can play a role in supporting the continent's ambitions to become more involved in value chains. This is particularly true because, it is noted, in cases such as the EU and US Memoranda of Understanding (MoUs) with Zambia and DR Congo, and the EU's MoUs with Namibia and Rwanda, development partners have promised to support African countries to process their transition minerals domestically, as part of agreements designed to facilitate access to those minerals.
"Where Africa's partners have made these promises, they should keep them. This support need not be restricted to processing transition minerals in-country, but could also cover efforts to boost local content, i.e., a greater role for domestic companies in supplying the mining sector," the report reads.
Bernard Nsanzimana, a mining governance expert, generally agrees with the new research, albeit with some research-based critiques. He told The New Times that Africa's "mineral-rich countries are not rich countries" due to different reasons. These include, he noted, lack of value addition initiatives and hence export of huge amounts of unprocessed minerals, lack of access to sufficient investments, corruption and public funds embezzlement as associated with lack of transparency and accountability from government officials, poor contribution of the mining sector to the socio-economic development of communities, environmental degradations, child labour, sexual violence, as well as relying on mining incomes and ignoring more opportunities as offered by other economic sectors.
Therefore, Nsanzimana supports PWYP's recommendations to governments, the private sector, the civil society and development partners in tackling the challenges, not simultaneously, but rather progressively with a key priority to focus on value addition before jumping into manufacturing activities in Africa.
He added: "However, the continental level research has fully ignored the foundation laid by the Africa Mining Vision (AMV) as a policy framework created by the African Union (AU) in 2009 to enhance transparency, equity and the optimal development of the mineral resources to underpin broad-based sustainable growth and socio-economic development in Africa.
"Though by the time of its adoption in 2009, transition minerals had not got the same pace as today, the AU created the African Minerals Development Centre (AMDC) in 2016 to oversee and coordinate implementation. Recent works of the AMDC include the trends of the energy transition minerals. Note [that] with regards to the AU, the PWYP report merely said that the 'AU is currently developing an African Green Minerals Strategy to make the most of the continent's transition minerals', though this was not well developed and related to works done by the AMDC within the AMV implementation framework."
Poorly negotiated mining contracts with multinationals
Originally, Nsanzimana noted, the AMV detected that among other key challenges faced by mineral-rich countries "include poorly negotiated mining contracts with multinationals" and the poor mining techniques due to the dominance of artisanal means of mining and processing (ASM) across Africa.
"It is good to think about value addition. But what about minerals that are lost during the mineral ore washing at mine site level where few mineral products are caught due to poor recovery techniques? Therefore, the upstream value-addition should also have been thought of. What would be the role of local basic mineral beneficiation and high-level mineral polishing, smelting and refining if acquired products are exported at a very low cost that shall not help countries to improve on their economic development?"
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"The PWYP research report covered the idea of preferential trade agreements among African countries as being negotiated within the African Continental Free Trade Area (AfCFTA) framework and partnership agreements; but left behind the issue of mining contracts negotiation skills and other capacities as some multinationals will still need to invest in Africa in both mining and processing or value addition, and in purchasing minerals from Africa. Additionally, the PWYP report did not cover issues pertaining to illegal mining, mineral smuggling, wars and insecurities as other key issues faced by different mineral-rich countries."
Rwanda is home to transition minerals including, mainly, Beryllium and Lithium.
Rwanda has so far prioritized exploration activities to fast-track the transition minerals deposits and assess their economic viabilities before venturing into mining, processing, value addition and the sale of the same minerals, Nsanzimana said.
He said: "It is within the same context that Rwanda welcomed the second largest mining company in the world - the UK-Australian Rio Tinto for ongoing lithium explorations across the country. Similar activities got launched at Trinity Metals, Musha-Ntunga mine by the senior management of the Rwanda Mines, Petroleum and Gas Board (RMB) on the 28th November 2023.
To avoid illegal mining and price speculations, he recalled, on August 8, RMB suspended the mining and trading of beryllium.
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"As a country aiming at becoming a mineral hub for Africa, as there are so far companies smelting cassiterite, coltan and gold in country; I salute Rwanda's efforts to attract investments to locally add value to the transition minerals. One of the strategies to increase mineral income is to stop exporting unprocessed minerals, but rather prioritize the local value addition," Nsanzimana said.
