Critical Extraction

The global push for clean energy has ignited an unprecedented demand for critical minerals, the essential building blocks of batteries, electric vehicles, and renewable technologies. Africa, with its vast untapped reserves of lithium, cobalt, copper, and more, finds itself at the centre of this global "rush." The International Energy Agency (IEA) reports that demand for lithium alone tripled from 2017 to 2022, and the critical minerals market is projected to more than double by 2030.

This presents a golden opportunity for African nations to leverage their mineral wealth for economic development and industrialization. The International Monetary Fund (IMF) estimates that this boom could increase the region's GDP by 12% or more by 2050, with potential global revenues from key minerals reaching $16 trillion over the next 25 years. However, experts warn that without a fundamental shift in strategic planning and governance, this could become another chapter in the "resource curse" narrative that has plagued the continent for decades.

Challenges on the Horizon

Several challenges threaten to undermine Africa's potential gains:

• Limited Local Processing: African countries often export raw materials rather than processing them locally, missing out on significant value addition and job creation opportunities. For example, raw bauxite fetches a modest price compared to processed aluminum.

• Investment Barriers: Attracting foreign direct investment for mineral processing is hampered by the absence of a substantial regional market.

• Outdated Strategic Visions: The African Mining Vision (AMV), while a step in the right direction, needs to be revised to specifically address the unique challenges and opportunities of the critical minerals boom.Similarly, individual countries' mining visions often lack the strategic foresight and regulatory frameworks needed to ensure equitable and sustainable development.

• Lack of Comprehensive Strategies: Many African countries lack comprehensive strategies for managing their critical minerals sector, leaving them vulnerable to exploitation by foreign mining companies.

• Outdated Policies: Outdated mining policies and regulations fail to address the unique challenges and opportunities of the critical minerals boom, often leading to unfair deals and minimal benefits for local communities.

• Environmental and Social Risks: The IEA highlights significant environmental and social risks associated with mining, including water scarcity, pollution, community displacement, and labor exploitation. These risks are already evident in ongoing lithium projects across the continent.

• Supply Chain Dominance: China's dominance in refining and processing critical minerals raises concerns about supply chain vulnerabilities and potential geopolitical tensions.

A Path to Sustainable Prosperity

To avoid the pitfalls of the resource curse and ensure that the critical minerals boom benefits African nations,a paradigm shift in policy and strategy is required:

• Revised African Mining Vision (AMV) and African Green Minerals Strategy (AGMS): The AMV should be updated to prioritize local value addition, environmental sustainability, and community engagement in the critical minerals sector. It should provide a clear framework for regional cooperation and harmonization of policies. The forthcoming AGMS can further guide African countries in strategically and sustainably exploiting their raw materials, crucial to the global energy transition.

• National Mining Visions: Individual countries must revise their mining visions to align with the updated AMV and the specific needs of the critical minerals sector. This includes modernising regulations, promoting transparency, and ensuring equitable benefit-sharing with local communities.

• African Critical Minerals Strategy: Building on the revised AMV and AGMS, the African Union should develop a comprehensive strategy that guides member countries in negotiating fair contracts, establishing transparent licensing processes, and promoting responsible mining practices.

• Regional Collaboration: A regional strategy, built on cross-border collaboration and integration, can create a larger, more attractive market for investment and leverage the diversity of critical minerals across the continent. The African Continental Free Trade Area (AfCFTA) can play a crucial role in this effort.

• Domestic Reforms: Structural reforms are needed to support domestic companies in the mining and processing sectors. This includes strengthening financial markets, improving access to finance, and ensuring accountable and transparent institutions.

• Responsible Resource Management: Strict adherence to international environmental and social standards is essential to minimize negative impacts and ensure that local communities benefit from mining projects.

• Investment in Local Capacity: Prioritise investments in local skills and technological capacity to enable African nations to participate in the entire mining value chain, from exploration to manufacturing.

The Time to Act is Now

The world's growing appetite for critical minerals presents a unique opportunity for Africa. However, the window to seize this opportunity and avoid the resource curse is narrowing. This requires a multi-faceted approach that addresses the complex challenges and prioritises the long-term well-being of both people and the environment. A revised African Mining Vision, updated national mining visions and a comprehensive African Critical Minerals Strategy are essential first steps in this transformative journey.