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Africa’s critical minerals lay the ground for mutually beneficial partnerships with industrialised nations

Africa’s critical minerals lay the ground for mutually beneficial partnerships with industrialised nations
Peter Fabricius
By Peter Fabricius
8 Feb 2024
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The Investing in African Mining Indaba has heard that the interests of African countries have to be factored into the rush for critical minerals.

Everyone at the Investing in African Mining Indaba in Cape Town is talking about “critical minerals”. But the question was pertinently asked: Critical for whom?

Critical minerals like lithium, cobalt, copper and rare earth elements are all the rage because they are crucial ingredients of green technologies such as batteries for electric vehicles and wind turbines.

But “critical for whom?” World Bank mining expert Sven Renner asked during a panel discussion at the indaba. 

He stressed that there were two parties in mining partnerships. Industrialised countries had a legitimate interest in securing supplies of minerals, including critical minerals.

“While African mining countries — as they tell us again and again — have an interest that goes beyond supplying industrialised countries with their minerals,” Renner said, “the question is, how do we find that common ground … that would really allow for a partnership?” 

To ensure the African side also benefitted, mining investors needed to align with the mining countries’ policies and priorities, including creating jobs, leveraging the mining sector for broader development, particularly infrastructure development such as energy and transportation, and adding value to raw minerals.

Renner noted that about $5-trillion a year would have to be invested in the energy transition if the world hoped to meet the target of limiting the global temperature to 1.5°C above the pre-industrial level.

That created a gigantic market, about 80% of it concentrated in transitional technologies which originated in mining. It was vital to ensure all these benefits did not accrue only to industrialised countries. So, for example, they would have to transfer considerable skills to Africans. 

Read more in Daily Maverick: Race for green metals can transform Africa and the world, unlock global decarbonisation

For African countries to benefit from the boom, they would need to think regionally — for instance, in developing batteries for electric vehicles. 

Renner noted that both parties would have to think beyond securing the supply of critical minerals such as copper, cobalt or lithium because the technologies that require those minerals were likely to change very quickly. 

He said that not only critical minerals but also base metals such as iron and copper would be critical for the economic development of African countries. 

Economic development partnerships


Britain’s High Commissioner to South Africa, Antony Phillipson, said that given the historical legacy of his country in Africa, “We don’t want to come across as patronising and paternalistic.”

He noted that in a development white paper last year, the UK had decided that helping developing countries with their economic development was the best way of getting development aid on the ground.

That meant building meaningful partnerships with governments, private sectors and communities. He cited the example of the $8.5-billion Just Energy Transition Partnership which the UK and other Western countries had concluded with South Africa.

“Getting the right supply of these minerals is going to be absolutely critical. But we want to do that in a way that goes completely with the grain of the SA government’s own ambitions for a just energy transition,” Phillipson said.

Read more in Daily Maverick: New investment pledges boost South Africa’s just energy transition funding pool to $11.8bn

He said that in developing the partnership with Africa, institutions such as the City of London could play a key role by providing financing. The International Council on Mining and Metals in London, which sets global standards for safe and responsible mining, could also play an important role. 

Other important roleplayers were the London Metals Exchange — which ensures responsible sourcing of commodities in mineral value chains — and monitoring bodies like the Extractive Industries Transparency Initiative and the Natural Resource Governance Initiative. The UK supports and helps fund them.

British Robinson, the coordinator of the United States’ Prosper Africa programme, which coordinates 17 US agencies involved in Africa’s development, said its aim was to crowd in two-way investment between the US and Africa.

She cited the US’s Partnership for Global Infrastructure and Investment which was coordinating governments and private companies to build infrastructure.

“The idea is not to tell governments what to do, or to do it our way, but to meet them where they are; intentionally finding investors and doing the matchmaking, providing transactional services and building economies.”

An example of the US’s fundamental economic approach was its partnership with a Togo bank to use a $100-million loan guarantee from the US Development Finance Corporation, underwritten by the Bank of America, to create mortgage markets in six west African countries. 

She said that by providing expertise such as through the US Geological Survey, the US could help stimulate mining investment by de-risking it. 

The right policies


Ghana’s mining minister, Samuel Jinapor, said the relations between African and industrialised countries were fundamentally different from what they had been 50 years ago. Back then the approach to mining was “dig and ship”. But now, Africa’s mining countries were saying that for their minerals to benefit them, two things were essential: value addition and indigenous participation.

It was critical to have the right policies. Ghana had policies to ensure value addition to all its minerals. And so, for example, lithium could not be exported raw and there had to be at least 30% participation of Ghanaians. 

Jinapor stressed though that African countries had to be realistic and not expect to build entire value chains in their countries. Only China had been able to build the entire value chain for lithium-ion batteries from end to end, which not even the US had been able to do. 

African countries should aim rather to build the high end of the lithium value chain in their countries.

African countries also had to create conducive environments for mining investment, including transport, fair tax regimes and energy prices and predictable regulation — “not changing the rules in the middle of the game”. More broadly, mining also had to guarantee the sanctity of contracts, democracy, the rule of law and independent judiciaries. 

Having done all that, African countries could insist that the highest end of the value chain be retained.

Read more in Daily Maverick: After the Bell: Africa is eating SA mining’s lunch

At another panel, Jose Fernandez, the US under secretary for economic growth, energy and the environment, gave an update on progress in the Minerals Security Partnership (MSP), which comprises 14 countries — mostly Western but including India.

It aims to accelerate the development of diverse and sustainable critical energy minerals supply chains through working with host governments and industry to facilitate targeted financial and diplomatic support for strategic projects along the value chain. 

Fernandez said four MSP projects had already begun and a fifth was about to be announced.  One aim of the MSP is to ensure values such as transparency and equity in critical mineral supply chains.

Fernandez said the US had realised that their companies could not win “a race to the bottom” — ie, a critical mineral market in which labour and environmental standards were ignored. 

The MSP would instead help to ensure a “race to the top” he said. The MSP is assumed to be an attempt to counter the dominance of China in the competition for Africa’s critical minerals. 

Jon Jin, the vice-president of China’s CMOC Group, appeared to be implicitly countering this narrative when he told the same panel that CMOC, which he said was the world’s largest supplier of cobalt and the second-largest of molybdenum, was one of “the most ethical, cleanest, safest and most cost effective suppliers”.

He said that more than 50% of its minerals were delivered to international customers. This was possibly a counter to the Western narrative that China is trying to monopolise the critical mineral market. DM

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