Africa must not lose out on the massive global demand for critical minerals, warns Mineral Security Partnership

6 Feb 2023

African mining nations have been warned not to miss out on the once-in-a-lifetime opportunity to benefit from the huge global demand for the critical minerals necessary for a clean energy transition.

Through their Mineral Security Partnership (MSP), the United States and 12 other nations say they are trying to help Africa develop these minerals in a way that benefits their people.

The MSP partners are trying to ensure a “race to the top” and not a “race to the bottom” in the accelerating rush by nations of the world to attain critical minerals such as lithium and graphite, Jose Fernandez, US Under Secretary for Economic Growth, Energy, and the Environment told the African Mining Indaba in Cape Town on Monday.

Fernandez said the aim of the MSP was to ensure that its miners follow high standards of environmental and social protection and governance, as well as investing in every part of the mining supply chain; not just extraction, but also processing and recycling, to ensure that African countries derived the greatest benefit.

“The reason I’m here is to look for ways to create partnerships with African countries so they can benefit from the world’s desire to achieve a clean energy future,” Fernandez told Daily Maverick in an interview at the indaba.

“They have the resources. This planet cannot reach its goals without African nations. That’s an opportunity, but it’s also a risk. And the risk is that those resources will not go to the right people, or be used transparently. Those investments will leave behind environmental degradation.”

And so Fernandez said the MSP countries were currently fine-tuning their ESG (environment, social and governance) principles, distilled from many guidelines such as those of the World Bank and the OECD, to ensure that the rush to acquire critical minerals is a race to the top. He hinted that the MSP would publish its ESG principles during the course of the indaba this week.

Fernandez stressed that Africa should not waste this opportunity which might not come again, at a time when there was unprecedented interest in its critical minerals.

He noted in his keynote address that the International Energy Agency (IEA) had recently 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.

“The IEA has also noted that the pace of adoption for renewable energy is accelerating dramatically around the world. That acceleration means we must also look for ways to support recycling of electronic scrap and waste, and we must do it sustainably.

“If we succeed, recycling will reduce demand: by 2040, 10% of electric vehicle (EV) battery minerals could come from recycled copper, lithium, nickel and cobalt.

“With EVs expected to command half the global market by 2030, that is a significant amount.”

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The world not only lacked the volumes of critical minerals needed to power a clean energy agenda, but current global supply chains for these minerals – from extraction to production to recycling – were not diverse enough.

This raised the fear of these supply chains – in some cases relying on single sources – breaking down, as medical supply chains had collapsed during Covid.

To address those concerns, the US had launched the MSP last June with 12 partners: Australia, Canada, Finland, France, Japan, the Republic of Korea, Norway, Sweden, the United Kingdom, the United States and the European Union. And Italy had just joined.

Fernandez said the MSP would tackle the critical minerals challenge in four main ways:

Sharing information about potential projects;

Promoting investment and financing;

Adopting high ESG standards; and

Expanding offtake and recycling opportunities in critical minerals projects.

He stressed that the MSP was not about altruism as, increasingly, both investors and consumers were demanding sustainable development and more and more mining projects were collapsing because local communities simply stopped them.

“Experience shows that economic development that only benefits a few is not sustainable. During Pope Francis’ visit to the Democratic Republic of the Congo (DRC), he denounced the ‘economic colonialism’ that results in the DRC and others not benefitting from their ‘immense resources’.”

And so the MSP partners were seeking to move away from unsustainable development towards transparency, community welfare and environmental protection.

“We want to involve the communities affected by potential projects in the decision-making process.”

Fernandez said the MSP was also responding to the demand from African mining countries that investment should not only be in the extraction of critical minerals, but also in processing and recycling, so that the Africans benefitted from the value-addition.

“We agree, and that’s why half of the projects the MSP is considering today involve varying levels of processing beyond extraction.

“For example, the United States recently signed a memorandum of understanding with the DRC and Zambia to help them establish a new supply chain for EV batteries.”

Daily Maverick asked Fernandez if the US and other MSP members were not being too idealistic in investing in EV battery production in the untested environment of the DRC and Zambia.

He agreed it was an ambitious goal, but it was a goal that was echoed in a number of other countries “because what the Congolese and the Zambians are looking to do is engage in value-added activities and not simply to be an extractive nation. And we agree with that. There is value-added to be created and there’s no reason why it needs to take place outside of Africa.”

The US would provide the DRC and Zambia with technical assistance “so they can engage in transparent and fair tenders where they agree on fair terms with their operators and their mining companies. And we believe that, done right, it could succeed.”

Fernandez said there was a risk of failure, but added that all mining projects involved a degree of risk.

Asked why none of the MSP countries is in Africa, Fernandez said the MSP was open to any country that wanted to join it.

He said he was in South Africa to create partnerships with African countries to help them benefit from the world’s desire to achieve a clean energy future.

He noted that he had had discussions with government officials in South Africa – including minister of trade, investment and competition, Ebrahim Patel – “to engage on projects where they are looking to attract foreign investment and to attract it for the right reasons and in the right form”.

“So, we see opportunities here in South Africa.”

He stressed that it was not necessary for African countries to join the MSP in order to benefit from it. DM

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