Loaded for Bear: Africa Oil Week begins in shadow of green energy scramble

Members of Extinction Rebellion protest during Africa Oil Week outside Cape Town International Convention Centre on 4 October 2022 in Cape Town, South Africa. The group is calling on African leaders to stop exploring and exploiting new oil and gas fields in Africa, and also to invest in non-fossil-fuel technologies. (Photo: Gallo Images / Brenton Geach)

By Ed Stoddard

7 Oct 2024

Africa Oil Week begins in Cape Town on 8 October. But the real scramble in Africa these days is for the green metals required for the energy transition.

A decade or so ago, Africa Oil Week took place against the backdrop of a scramble for oil and gas in Africa.

Recent discoveries at that time included Ghana’s offshore Jubilee oil field in 2007 and Uganda’s Albertine Graben oil deposit.

Africa was seen as the growth area for oil and gas exploration and production with a promising geology that held massive deposits waiting to be uncovered.

Lurking in the background was the corrosive impact that oil historically had on African countries that had been producing the stuff for a few decades. In petro-states such Angola, Nigeria and Equatorial Guinea, billions of dollars had been siphoned, stolen and squandered, enriching elite ruling classes who generally ruled with an iron fist.

In the case of Equatorial Guinea, little has changed and many of the changes in other petro-states such as Angola are regarded as cosmetic. The bottom line is that the wealth generated by oil and gas in Africa has seldom trickled down into wider prosperity.

But the narrative was that oil and gas would transform the political economies of newly producing states, and the taps were primed to gush.

Race for green metals

Things haven’t quite worked out that way, not least because Africa’s hydrocarbon push has since been overshadowed by the race for green metals.

According to a recent note from Wood Mackenzie, investment in African upstream projects has been slow to recover since the pandemic.

“Total African upstream spend in 2015 was $60-billion, which dropped to $25-billion during the pandemic’s trough in 2020,” the report says.

“Investment of around US$40-billion annually, or 8% of global capex, may be the new normal.”

Still, it is not all doom and gloom. Investment in deep-water exploration — which is very expensive and technically sophisticated — around Africa has been slashed.

But Wood Mackenzie sees recovery to pre-pandemic investment levels by 2025. For upstream oil and gas, it sees Mozambique possibly becoming Africa’s top investment destination by 2027.

The elephant in the room is the global decarbonisation drive to douse the flames of climate change linked to fossil fuel usage.

The World Bank, for example, is reluctant to provide finance for fossil fuel projects in Africa, and a growing number of commercial banks are also staying clear of the sector. The coal industry is already slowly being starved of the capital it needs.

And Africa’s potential on the green metals front is simply massive.

“In terms of the minerals essential for a successful energy transition, Africa is a clear global leader. With 79% of global cobalt reserves, 44% of global manganese and 21% of global graphite, as well as sizeable resources of many other minerals including copper and tin, the continent’s potential is unrivalled,” Wood Mackenzie noted in another report early this year.

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

Africa holds an estimated 30% of the world’s mineral reserves, but as of 2022, it accounted for less than 10% of global expenditure on mining exploration, according to S&P Global’s World Exploration Trends 2023 report.

Decarbonisation goals

Increasing the pipeline of green metal exploration projects in Africa is crucial to meeting the decarbonisation goals targeted by governments and companies — and this is an area that you can bet banks will be happy to bank on.

It must also be noted that the mining sector’s social and political legacy in Africa has also been pretty sordid. The apartheid regime for one was underpinned by the mining sector.

But the mining industry in recent years — with some glaring exceptions — has been cleaning up its act in South Africa and elsewhere; and it is needed to clean up the world’s supplies of energy.

African countries can, of course, encourage both oil and gas and green metals exploration and development.

But green metals are the future in Africa, while fossil fuel projects are rooted in a receding past and risk becoming stranded assets. DM

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