Africa’s Critical Minerals: A Geopolitical Battleground
Table of Contents
- 1. Africa’s Critical Minerals: A Geopolitical Battleground
- 2. Leveraging Mineral Wealth for Lasting Progress
- 3. Home Is Where the CRMs Are: Evolving Regulations in Africa
- 4. Africa’s Green Minerals Boom: Leveraging Local Content for Economic Growth
- 5. Local Content Obligations: A Pathway to Shared Benefits
- 6. Local content Policies in Africa’s Mining Sector: Challenges and Opportunities
- 7. building Linkages: A Challenge for African Nations
- 8. Local Content Requirements: Empowering African Mining Industries
- 9. A Win-Win Model: Foreign Investments and African CRMs
- 10. Africa Pushes for Localized Value Addition in Critical Minerals Production
- 11. Zimbabwe Leads the Way with Lithium Processing
- 12. Other African Nations Follow Suit
- 13. The Decline of Extractive Investment Models in Africa
- 14. EU-Africa Mineral Partnerships: A Snapshot
- 15. EU Bolsters Ties with Africa, Focusing on Critical Raw Materials
- 16. Lobito Corridor Project Highlights Infrastructure Focus
- 17. Building a Stronger African Battery Supply Chain Through Regional Integration
- 18. The Potential of Regional Cooperation
- 19. A Model for Success: The Zambia-DRC Partnership
- 20. Mining in Africa: A Chance for New value Chains
- 21. Streamlining Local Content Requirements
- 22. Investing in Skills Development
- 23. The transition to a more value-added mining sector in Africa requires a coordinated effort involving governments, industry, and international partners. By focusing on streamlining regulations,supporting local capacity building,and fostering regional cooperation,Europe can play a vital role in unlocking the full potential of Africa’s mineral wealth. ## Unlocking Africa’s Mining Potential: A Partnership for Innovation and Growth Developing Local Skills
- 24. Integrating Africa into Global Value Chains
- 25. Promoting Technology Transfer and Innovation
- 26. boosting Local Economies: The EU’s Role in Africa’s Mining Sector
- 27. Empowering Local Businesses
- 28. Making Strategic Investments
- 29. The Path to Sustainable Access
- 30. Changing the Dynamic
- 31. About the Author
- 32. Understanding ECFR Publications
africa has become a focal point in the global competition for critical raw materials (CRMs), the essential building blocks for a green future. From solar panels to electric vehicles, these minerals are in high demand, attracting a diverse range of international players vying for access to Africa’s abundant resources.
Alongside established partners like the United States, the European union, and China, emerging economies such as the Gulf states, Turkey, and India are making significant inroads. In recent years, these countries have secured new mining rights, concessions, and announced ambitious plans for mineral processing plants, refineries, and battery production facilities across the continent.
Leveraging Mineral Wealth for Lasting Progress
The surge in global demand for CRMs has empowered resource-rich African nations, granting them greater leverage in negotiations with international partners.
African governments are strategically implementing measures to ensure that their CRM wealth translates into tangible benefits for their economies and citizens. Export bans on unprocessed ores and local content requirements, which mandate the use of domestic goods and services in value-added processing, are becoming increasingly common. These policies aim to drive domestic innovation, boost productivity, and foster the development of sustainable, industrialized economies.
Home Is Where the CRMs Are: Evolving Regulations in Africa
Many African nations view the global thirst for critical raw materials (CRMs) as a once-in-a-generation chance to fuel industrialization. Countries like the Democratic Republic of Congo (DRC) are aiming to capitalize on this demand, moving beyond simply exporting raw materials.They seek to develop refining and processing capabilities to create a more diversified economy and retain a larger share of the added value. With just 2 percent of the global manufacturing value-add, Africa is eager to transform its economic landscape. Local content requirements are a key part of this strategy. Governments want to ensure that investments in CRM extraction translate into tangible benefits for their citizens, including new jobs and a boost to other sectors. While these local content regulations present a challenge,they also offer an opportunity for European countries looking to secure access to essential CRMs. The EU currently relies heavily on china for its CRM supply. This dependence has become a geopolitical concern, prompting the EU to seek choice sources. However,European efforts to build refining and smelting facilities in Africa and invest in downstream projects have lagged behind their ambitions. While initiatives like the Lobito Corridor project have yielded some results,they often fall into a “mine-to-port” model,which doesn’t address African countries’ desire for broader industrial development. African governments prioritize partnerships that contribute to their industrialization goals, nonetheless of geopolitical considerations. This presents a unique opportunity for Europe.By embracing local content requirements, European companies can forge mutually beneficial partnerships with African nations. This approach can help Europe secure a more sustainable and reliable supply of CRMs while allowing African countries to achieve their industrialization aspirations. The next step is to address the existing challenges in EU-Africa CRM relationships. By finding creative solutions and tailoring their approach to local needs, European firms can create partnerships that are both economically viable and socially responsible, leading to a win-win scenario for both sides. fieldTypeAfrica’s Green Minerals Boom: Leveraging Local Content for Economic Growth
African nations are seizing the opportunity presented by the global surge in demand for critical raw materials (CRMs) – essential components in electric vehicle batteries, solar panels, and other green technologies. Gone are the days of simply exporting raw materials. Countries like Ghana, Namibia, Zambia, and Zimbabwe are implementing policies and strategies to ensure local ownership and supply within their mining industries.This shift reflects a broader movement across the continent, spearheaded by initiatives like the African union’s revamped Africa Mining Vision and the African Minerals Governance Framework. These frameworks aim to transform Africa’s natural resource wealth into a catalyst for industrialization and economic growth.Central to this new approach are “local content obligations” – a set of policy tools designed to ensure that mining operations benefit the local economy. this can involve requirements for domestic ownership stakes in mines, the use of local labor and services, and the transfer of skills and technology. The ultimate goal is to create a ripple effect, where the mining sector acts as a springboard for broader economic development. This means fostering linkages with other industries beyond mining, generating jobs, and boosting local revenue. Ghana’s recent approval of a green minerals policy exemplifies this trend, demonstrating the continent’s commitment to securing a larger share of the value generated by its vast mineral resources. As the demand for green technologies intensifies, African nations are in a strong position to leverage their mineral wealth for sustainable economic growth.
Local content Policies in Africa’s Mining Sector: Challenges and Opportunities
African nations rich in critical minerals (CRMs) are increasingly implementing local content policies to maximize the benefits from their resources. These policies aim to ensure that the extraction and processing of CRMs contribute to local economic development, job creation, and technological advancement. Commonly, these policies focus on five key areas: equity participation, local procurement, employment quotas, skills development, and technology transfer.
building Linkages: A Challenge for African Nations
however, fostering connections between the mining sector and other economic sectors proves challenging for many African nations.Limited local supplier capacity hinders participation in procurement markets, largely due to a shortage of locally produced goods, skilled workers, and appropriate technology within both private and public sectors. Further obstacles include insufficient funding for research and development, inadequate incentives like tax waivers, and a lack of reliable electricity supply for value-addition processes. Most CRM-rich African countries lack the necessary infrastructure – including power, railways, and roads – to make their value-addition production globally competitive. Despite these challenges, studies suggest that by 2030, African countries could become cost-competitive in refining raw materials. Leveraging their abundant mineral resources and implementing supportive policies will be key to unlocking the full economic potential of their CRM reserves.Local Content Requirements: Empowering African Mining Industries
African nations are increasingly leveraging local content requirements to reshape their mining sectors and foster economic growth. These regulations mandate the use of local goods, services, and labor in mining operations, stimulating domestic economies and fostering industrial development. While resource-rich countries once focused on attracting foreign investment through low costs and lax regulations, they now recognize the strategic importance of maximizing in-country benefits. Despite initial hesitation within the industry, citing concerns about cost increases and potential disruptions, many African governments are successfully implementing local content obligations. In Ghana, such as, regulations introduced in december 2020 require mining companies to source 50 essential items, including explosives, from Ghanaian suppliers.
the Ghanaian regulations further stipulate that only companies with solely ghanaian directors and shareholders can supply certain critical items, offer insurance services, and engage in activities like surface mining.This approach aims to empower local businesses and ensure a greater share of mining revenues remains within the country.
Even though these initiatives have primarily been implemented at the national level, some countries are exploring regional collaborations to enhance the impact of local content requirements.Zambia and the DRC, such as, are shifting away from isolated industrialization strategies and working towards more integrated value chains, notably in cell manufacturing and automotive assembly.
A Win-Win Model: Foreign Investments and African CRMs
The increasing use of local content requirements is reshaping investment patterns in Africa, delivering significant wins for host countries. These policies are not only attracting foreign investment but also generating tangible economic benefits through the development of local value-added mineral production capabilities. China has emerged as the dominant foreign investor in African mining, driven in part by initiatives like the belt and Road Initiative. Chinese-backed companies have acquired lithium mines in Zimbabwe and the DRC, establishing processing facilities to produce chemical-grade downstream products. However, the way African countries are shaping Chinese investment varies widely. In Zimbabwe, for instance, beneficiation requirements have fostered sustainable, value-added industrial growth, largely through Chinese investments. Following a 2022 law banning the export of raw lithium, Chinese mining firm Shengxiang Investments announced plans to increase domestic refining capacity in the country.Africa Pushes for Localized Value Addition in Critical Minerals Production
Beyond simply extracting raw materials, African nations are increasingly determined to control the downstream processing of critical minerals like lithium and manganese. This shift towards localized value addition is driven by a desire to generate more revenue, create jobs, and develop local expertise.Zimbabwe Leads the Way with Lithium Processing
Zimbabwe exemplifies this trend. In July 2024, a Chinese-invested company announced that its $40 million lithium processing facility near the capital was nearing completion.The plant, expected to produce 2,500 tonnes of lithium concentrate daily and employ over 200 local workers, is a testament to Zimbabwe’s ambition. Encouraged by government policy, four lithium mining companies have submitted plans to produce battery-grade lithium within zimbabwe’s borders this year. These initiatives include a $310 million investment by a british-Chinese consortium for a 3 million tonne per year lithium processing plant and a $300 million spodumene processing plant at the Bikita Lithium Mine, owned by Sinomine Resource Group.Other African Nations Follow Suit
similar investments in localized value addition are gaining traction across the continent. In Ghana, the atlantic Lithium/Ewoyaa Project, led by Australian and American investors, is poised to establish a lithium ore processing plant. Meanwhile, Namibia is witnessing a flurry of activity, with Australian company Lepidico leading the Karibib Lithium Project and the Omaruru Lithium Project also under development. Lepidico aims to raise $50 million to revamp historic lithium mines and build a processing facility capable of producing high-grade concentrates. gabon, the world’s second-largest manganese producer, has seen a $400 million manganese smelter operational since 2015. This has spurred the growth of a local processing industry, with investors now eyeing the development of a new 80,000-tonne-a-year battery-grade ferro manganese and silico manganese plant. Likewise, Ghana’s government has plans to boost manganese revenue through a new 450,000 tonne per year manganese refinery.The Decline of Extractive Investment Models in Africa
A new era is dawning in Africa’s mining industry. The days of foreign companies simply buying mines,extracting resources,and exporting raw materials for processing elsewhere are fading fast. This change is driven by a shifting regulatory habitat across the continent, making it increasingly challenging for global players to ignore local labor and resources. Countries like Ghana exemplify this transformation. Ghana, which has been exporting manganese in its raw form since 1916, recently announced plans for a $450 million manganese refinery built in partnership with a Chinese company. This project is a significant step towards industrializing ghana’s economy, creating 400 local jobs and adding value to its manganese resources. gulf countries, led by the United Arab Emirates (UAE), are also making significant investments in Africa’s critical raw materials (CRM) sector. However, many of these investments have focused on existing mines, often bypassing the imposition of local content requirements due to pre-existing contractual obligations. The UAE, such as, signed a $1.9 billion deal with the Democratic Republic of Congo (DRC) in july 2023 to develop four existing mines. Saudi Arabia’s state-owned mining company, maaden, is also expressing interest in acquiring stakes in existing mining projects in Burundi, the DRC, and Tanzania. Additionally, through their joint venture, Manara Minerals, they are seeking stakes in Zambia’s copper mines. While these existing investments may not yet directly benefit local African economies through value addition, any future deals with new mines will likely have to adhere to stricter local content requirements. This shift towards local content approaches is a win-win. For global investors, it creates a more efficient value chain, providing access to cost-competitive and beneficiated CRM products that have already undergone value addition. In return, African partner countries benefit from job creation, workforce upskilling, technology transfer, and overall business development. This new model aligns perfectly with the industrialization goals of African governments, regardless of the origin of the investor—be it American, Australian, British, Chinese, or Gulf. As the EU’s green transition enters a pivotal phase, and the bloc works to reduce its reliance on China for critical raw materials, it cannot afford to fall behind in this race to invest in Africa.EU-Africa Mineral Partnerships: A Snapshot
since 2020,the EU has actively pursued agreements with several African nations to secure access to their critical raw materials.EU Bolsters Ties with Africa, Focusing on Critical Raw Materials
The European Union (EU) is deepening its relationships with African nations, with a particular emphasis on securing access to crucial raw materials. Through initiatives like the Global Gateway program, the EU aims to integrate African resources into global value chains by 2030. The EU has inked bilateral partnerships with resource-rich African countries, encouraging private sector investment in national and regional raw material value chains while emphasizing local value addition. Memoranda of understanding on the supply of critical raw materials (CRMs) have been signed with the Democratic Republic of Congo, Namibia, Rwanda, and Zambia since late 2022.
These agreements encompass a wide range of collaborative efforts, including integrating raw material value chains, mobilizing funding for development and infrastructure projects, promoting sustainable production practices, and providing capacity building, research, and skills training.
This situation presents a unique opportunity for the European Union. By prioritizing local content initiatives and supporting small and medium enterprises (SMEs), the EU can help African nations harness their mineral wealth for sustainable economic growth.
