Unlocking continent’s mineral potential: overcoming obstacles for greater beneficiation

Offei-Ansah

AFRICA, known for its abundant mineral deposits, contributes to about 30 percent of the world's resources. However, despite this wealth, approximately 70 percent of mined materials are exported to Europe and Asia for further refining and manufacturing into marketable products. This trend has sparked a growing chorus of voices within Africa calling for greater beneficiation, the process of increasing the economic value of raw minerals through in-country processing. Advocates argue that local beneficiation can generate higher incomes, employment opportunities, industrialisation, and regional integration. While the aspiration is ambitious, numerous obstacles stand in the way of its realisation.

African nations possess some of the largest deposits of crucial minerals on the planet. For example, Namibia stands as the world's second-largest producer of uranium and boasts significant reserves of tin and lithium, vital materials for supporting the green transition towards sustainable energy sources. The potential benefits of retaining these minerals within the continent are immense. However, achieving greater beneficiation requires concerted efforts from African governments, including comprehensive development plans and reforms. Infrastructure development, such as road networks and robust transportation systems, is a crucial part of this journey. Yet, inadequate infrastructure remains a significant hurdle. Additionally, miners cite political risk in certain countries as a major concern for potential investors.

While there is an increasing push for cohesion and development within Africa, exemplified by initiatives like the African Continental Free Trade Area that recognises the importance of infrastructure in advancing trade, there is still a pressing need for new policies to drive development. A 2021 report from the African Natural Resources Centre highlights the absence of adequate domestic policies aimed at developing beneficial value chains for prosperity and job creation.

Foreign direct investment (FDI) plays a vital role in realising the goals of beneficiation. Historically, Africa has been viewed as a risky investment destination, deterring potential investors. However, policymakers and government officials across the continent have been actively working to change this perception. A report by the UN Conference on Trade and Development revealed that between 2006 and 2011, Africa experienced the highest rate of return on FDI inflows compared to other regions. This positive trend reflects the continent's growing attractiveness as an investment destination.

The message from African policymakers and business leaders to investors is clear: "Africa is open for business." However, the question of beneficiation remains closely tied to the investment question. Achieving greater beneficiation necessitates increased investment in infrastructure, including reliable electricity supply, water infrastructure, and transportation networks. The inability to move raw minerals to processing plants and the lack of consistent electricity and water supply hinder the beneficiation process. Moreover, arguments are made for manufacturing minerals closer to their intended usage location, especially for products like lithium-ion batteries. As global supply chains face disruptions caused by the Covid-19 pandemic and geopolitical events, manufacturers are increasingly seeking local production options.

Anthony Viljoen, CEO of Andrada Mining, emphasises the potential benefits of in-country beneficiation. Viljoen believes that investors should assess the practical feasibility of beneficiation and align it with the capabilities of host governments. Despite debates against beneficiation, African governments prioritise value addition to their economies through continent-wide value chains.

Government officials in Africa maintain an optimistic outlook, believing that the challenges can be overcome. Nangula Uaandja, CEO and chairperson of the Namibia Investment Promotion & Development Board (NIPDB), acknowledges the significant opportunities for refineries on the continent. She highlights the advantages of refining a portion of Africa's mined minerals within the region. Namibia is investing in vocational training to develop a skilled labour force essential for the country's emerging manufacturing sector. With Africa projected to have the world's largest working-age population by 2050, the need for such development becomes even more critical.

While obstacles persist, Namibia stands out as an attractive investment destination in Africa. Viljoen commends the country's pragmatic and rational approach, emphasising the importance of collaboration between officials, economic development boards, miners, and investors to establish suitable policies, incentives, and tax regimes that benefit all parties involved.

As Africa seeks to unlock its mineral potential through greater beneficiation, the journey towards in-country processing faces significant challenges. Overcoming obstacles related to infrastructure, policies, and investor perception will be crucial for realising the vision of maximising the economic benefits of Africa's mineral wealth.

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