 |
| Critical Minerals |
IMF Sees $2 Trillion Potential, but Experts Warn of Weak Value Chains and Investment Instability
Coordinated Strategy, Local Processing, and Geological Surveys Key to Closing the Gap
Africa holds one-third of the world’s critical mineral reserves. But as global demand for energy transition metals surges, the continent still faces massive gaps in data quality, downstream capacity, and regulatory consistency, experts warn.
The International Monetary Fund (IMF) projects Africa could earn $2 trillion over the next 25 years from copper, cobalt, lithium, and nickel alone—essential for electrification, battery tech, and low-carbon energy. Additional reserves of manganese, rare-earth elements, platinum group metals, and graphite further enhance its potential.
Yet despite this natural wealth, Africa captures limited value. Most minerals are exported raw, missing out on the significant margin from refining and manufacturing. For example, Guinea’s bauxite sells for just $65 per ton in raw form, but refined aluminium fetches $2,335. The DRC exports 97% of its cobalt unprocessed; Zimbabwe’s rock-hosted lithium is trucked to ports for overseas refining, even though domestic electrification opportunities exist.
Policy and Data Deficiencies Undermine Leverage
According to Dr. Theophilus Acheampong of the Critical Minerals Africa Group (CMAG), the continent is negotiating from a position of weakness due to outdated or externally sourced geological data. Few African governments have invested in advanced mapping, seismic surveys, or geodata platforms—making it difficult to assess true resource value or negotiate equitable investment terms.
Acheampong also flags limited power infrastructure, poor logistics, and weak R&D ecosystems as major obstacles to mid- and downstream development. Energy-intensive processes like alumina smelting are simply not feasible in many African countries due to high electricity costs.
Legislative instability further deters investors. “Governments often renegotiate deals when leadership changes,” Acheampong warns. “That triggers arbitration and scares off new investment.” Instead, he calls for public equity stakes through sovereign or pension funds, and consistent ESG-compliant frameworks to attract capital from Europe, North America, the Gulf, and Asia.
The Need for Regional Cooperation
Acheampong argues no single African country has the full set of conditions—data, skills, infrastructure, incentives, ESG adherence—needed to compete globally. He calls for regional coordination and revenue-sharing models, where specific countries host processing hubs while others benefit from shared output and job creation.
Encouragingly, the African Union has launched a Green Minerals Strategy to guide integrated development. But execution remains uneven. Only 26% of critical mineral FDI now flows into manufacturing; the rest goes to extraction. Stakeholders aim to double the share of local processing in coming decades.
Outlook Clouded by Global Politics
With the energy transition slowing—partly due to rising geopolitical tensions and possible shifts in U.S. policy—the urgency for Africa to secure its place in green supply chains is even greater. While Chinese, Turkish, Gulf, and Indian investors ramp up interest, the continent must close regulatory and capability gaps quickly.
“We need to stop being just suppliers of raw material,” says Acheampong. “Africa can build its own battery and EV components markets—starting with simple products like two- and three-wheeler electrification.”
ScrapInsight Commentary
Africa’s critical mineral promise is tightly linked to future scrap flows and circular economy logistics. If beneficiation and battery component production take root on the continent, expect significant local scrap streams from off-spec cathodes, production byproducts, and eventual end-of-life batteries—especially if regional markets for two- and three-wheel EVs develop. However, limited smelting capacity and unreliable power infrastructure currently make closed-loop recovery difficult. For recyclers, this means Africa remains more of a raw feedstock source than a recycling hub in the short term. But if regional alliances deliver shared processing zones, we may see secondary markets rise, along with new pricing mechanisms for Africa-origin scrap in global markets.
Tags
RAREMETAL
