E C O N O M Y A T L A R G E

from RDJ Briefing - April 2023

TENDERS & CAREERS

Extending Africa’s Mining Value Chain - Can we?

AUTHOR: Chilombo (Olga) Priscila EconomicResearcher/Statistician@ RDJ Consulting

The alternative energy boom has its clear demands for raw materials to help in the fight against climate change and to help develop a sustainable lifestyle Africa has significant quantities of essential minerals and metals that are needed to manufacture batteries for energy storage both on and off-grid, electric vehicles (EVs), and of course other technologies These materials include cobalt, manganese, phosphorus, Lithium, iron, copper, and graphite. They are considered “green” resources due to their role in reducing carbon emissions in the energy and transport sectors.

The global demand for these “green” metals and minerals is on the rise, especially as pointed out in the intro, that the world is battling climate change impacts and aiming for global net-zero carbon emissions by 2050.

The growing demand is now creating a massive potential sellers’ market for those in possession of the resources although at times market trends defy true economic theory of supply and demand.

In fact, The International Energy Agency has predicted that demand for most minerals essential to the clean energy transition will increase by a factor of four (4) to six (6). It further reports that for some minerals, the increase will be exponential, so that by 2040, graphite demand will increase by 25 times, and Lithium by 42 times if current and predicted demand levels remain true.

Despite being endowed with the much-needed resources for EV batteries, African countries however, struggle with adequately managing them to the benefit of their people and the economy. Much of the global reserves of critical minerals required for manufacturing EV batteries are in South Africa (manganese, nickel and platinum), Democratic Republic of Congo (DRC) (cobalt), Zimbabwe (Lithium), Mozambique (graphite) and Zambia (copper) While these minerals are mined in Africa, the actual valueaddition work such as smelting, refining, cell assembly and ultimately energy storage and EV production takes place outside the continent Africa thus loses out on higher returns and on job creation that occurs from participating in value creation.

The 2023 African Mining Indaba that took place in Cape Town, South Africa addressed the matter by discussing ways in which the continent can grasp the chance to develop its green minerals to its own advantage In the same vane, individual African countries have also begun to take a stand in better managing and protecting their invaluable resources, to better incur all benefits along the value chain of producing these minerals.

On 20 December 2022 under the Base Minerals Export Control Act, the Zimbabwean government announced that it would be banning the exportation of Lithium as a raw mineral with immediate effect This decision was driven by the fact that Zimbabwe had been losing 1.7 billion euros from the exportation of Lithium as a raw mineral instead of processing it into batteries in-country. As a result, mining companies are now required to either set up local processing plants to expand the value chain incountry or provide proof of exceptional circumstances signed by the government before exporting Lithium from the country

The government of Zimbabwe reported that it has the largest amount of Lithium in Africa, so much so that it can supply a fifth of the world’s needs With continued high international demand for Lithium, Zimbabwe is projected to become one of the world’s largest Lithium exporters, with the government hoping to meet 20% of the world’s total demand for Lithium annually when it fully exploits its known Lithium resources In 2021, Zimbabwe’s mining sector contributed about 16% to the national GDP, and so the government also expressed its desire to start its own battery industry to boost its economy and bring about more benefits to its people.

Apart from the move of individual countries, the United States (US) Secretary of State for Economic Growth, Energy and the Environment - Jose Fernandez, said at the Africa Mining Indaba that:

“the US launched the Mineral Security Partnership (MSP) with 11 other developed nations in 2022 to ensure its miners maintain high standards of environmental and social protection and governance, and invest all along the supply chain so that African countries derive the greatest benefit ”

What else do you think African countries can do to ensure that their people benefit the most from its resources? Talk to us at briefing@rdjpublishing.africa

Readings: https://www.ntu.edu.sg/cas/news- events/news/details/electric-vehicles-africa-s-batteryminerals-and-gvc-opportunities https://issafrica org/iss-today/mining-for-energy-africa-mustseize-the-green-moment https://miningindaba com/home https://www africanews com/2022/12/29/zimbabwe-bans-allLithium-exports// https://www state gov/under-secretary-jose-w-fernandezskeynote-remarks-at-indaba-miningconference/#: :text=The%20International%20Energy%20Agenc y%20%5BIEA,and%20Lithium%20by%2042%20times.