By NJ Ayuk, Executive Chairman, African Energy Chamber (www.EnergyChamber.org)
To meet their green agendas, the European Union, the United States and China are engaging in the modern-day equivalent of a gold rush.
This time, however, fortune seekers aren’t looking for shiny nuggets in Canada, America or Australia. Instead, all eyes are on Africa’s critical minerals – cobalt, graphite, lithium and others – raw materials essential to the production of clean technology, including electric vehicles (EVs).
To say that Africa is generous in this regard seems almost an understatement. Africa holds more than half of the world’s cobalt reserves, 46% of its manganese and 21% of its graphite, all of which are used in EV batteries, and about a quarter of its bauxite, which is needed for solar PV technologies. Reserves aside, mining and production are already in full swing in some countries: Nearly 70% of all cobalt produced globally comes from the Democratic Republic of the Congo (DRC), and that country is tied with Peru as number two behind Chile in copper mining, a key component in electrical wiring. Lithium, which has applications in everything from EV batteries to the oils that help wind turbines spin, is also mined in the DRC, as well as in Zimbabwe and Namibia, while Ghana and Mali have untapped lithium deposits. Namibia is also the world’s second largest producer of uranium, which is used in nuclear power.
Given the urgency of the energy transition, it is not surprising that the market for critical minerals and rare earth elements (a group of 17 light and heavy metals and alloys integral to the performance and performance of engines and turbines; there are 100 rare earth deposits areas in Africa) is strong and growing. For example, the International Energy Agency (IEA) predicts that as the world moves away from fossil fuels, manufacturers of clean energy technologies will require exponentially more critical minerals than today. Specifically, the IOC says that by 2040 demand for lithium will be more than 40 times greater than it is now. in the same period, the need for graphite and cobalt will be 20-25 times greater. For copper, the expected expansion of the electricity grid over the next 17 years means that demand will likely double.
In short, opportunities abound for Africa, especially considering the scarcity of critical minerals almost everywhere else β if we can only take advantage of it.
This is a particularly topical issue as the 2023 United Nations Climate Change Conference (COP28) draws to a close and voices around the world continue to weigh in on what Africa should do (or not do) with oil and natural her gas.
If we are to be honest, we have to admit that we do not always have the best track record of turning resource wealth into real wealth for our people. But I believe we can break out of this pattern.
From our hands
For too long, due to a lack of will and internal politics, we have allowed our raw materials, including oil and natural gas, to be exported, meaning we have had no role in the processes that follow or the sale of finished products.
As a result, we’ve lost the job creation, industrialization and economic diversification that downstream growth represents, not to mention the money that comes with it: It’s just an economic fact of life that processed materials command a high price compared to raw materials.
Consider the DRC’s massive cobalt and copper mine, Tenke Fungurume, which has been producing since 2009 and is projected to have 32 years of reserves.
China Molybdenum Co. (CMOC), the world’s largest cobalt producer, owns 80% of the mine, with Gecamines, DCR’s state-owned mining company, owning the remaining 20%.
As if controlling the mine’s production wasn’t enough – an estimated 125,387 tonnes of copper and 10,465 tonnes of cobalt in the first half of 2022 alone – CMOC also controls 72% of the mine’s production refining capacity. But CMOC does not refine these minerals in Africa. Instead, they transport unprocessed minerals to ports in Durban, South Africa, and Dar-es-Salaam, Tanzania, for export abroad.
That’s a lot of potential revenue β a lot of potential, period β we’ve let slip away from our shores.
To take full advantage of the critical minerals beneath our feet, we must get rid of our “mining only” mentality. The value chain does not have to stop with export.
Yes, I understand the argument that minerals should be made into products closer to where they will be used, and that Africa lacks, for example, both the production capacity to turn cobalt into EV batteries and the market for electric cars. (Young African entrepreneurs have targeted this deficit, as you’ll see in a moment.)
But with sufficient investment and collaboration, we can build capabilities and catalyze the market.
The good news is that we are seeing progress in this direction.
- In April 2022, the DRC and Zambia signed a cooperation agreement to manufacture EV batteries in Katanga province, the mineral-rich region where Tenke Fungurume is located. This followed in December the signing of a tripartite memorandum of understanding (MOU) with these countries to develop an integrated value chain around EV batteries, βfrom mining to assembly line. To push the deal forward, earlier this year the African Export-Import Bank (Afreximbank) and the United Nations Economic Commission for Africa (UNECA) are helping the DRC and Zambia form special economic zones (SEZs) for the production of battery precursors . batteries and EVs. According to the United Nations, βAfreximbank and UNECA will play a central facilitating role, acting as financial and technical partners of the project respectively. The two institutions will lead the establishment of an Operating Company (OpCo) in a joint venture with investors (public and private) from the DRC and Zambia, as well as international investors such as Afreximbank’s subsidiary Impact Fund, the Fund for Export Development in Africa ( FEDA). )”
- Both the DRC and Zambia, along with Mozambique, Namibia and Tanzania, attended the recent Mineral Security Partnership (MSP) meeting to discuss how to improve mineral supply chains and ensure that countries can to profit economically from their critical minerals. The US, UK, Australia, Canada, France and Japan were among the MSP partners participating in the event. The objectives of the MSP are to attract public and private investment, increase transparency and promote environmental, social and governance (ESG) standards in critical mineral supply chains.
- In addition to the establishment of Toyota shops in Durban, South Africa, to assemble hybrid electric vehicles from imported “semi-burnt” vehicles and Uganda’s Kira Motors to convert internal combustion engine buses into EVs, a small industry of motorcycle manufacturers EV has appeared. in Rwanda, Nigeria, Uganda, Kenya and South Africa, potentially accelerating the development of a much-needed domestic market and obviating the need for the expensive grid-scale charging infrastructure required by four-wheelers. These companies are building EV motorcycles from scratch and subordinating conventional EV engines to existing bikes. As noted by Dr. Marit Kitaw, interim director of the Africa Minerals Development Center (AMDC), this is proof that “the continent’s technical and manufacturing capabilities can be scaled up with supportive policies, skills development programmes, infrastructure development and a favorable investment climate”.
- Speaking of AMDC, the organization, founded by the African Union in 2013, has developed the Africa Green Minerals Strategy (AGMS) to help African nations make the most of their mineral resources, participate more fully β and to do so sustainably. According to Dr. Kitaw, AGMS aims to accelerate the local production of inputs for the mining and processing of strategic green minerals. building more processing facilities on the continent, which will enable African countries to gain a greater share of the value chain; and expand Africa’s technical know-how and increase resources for research, development and innovation.
This is what progress looks like.
Work to do
However, obstacles remain. And we must proceed with caution.
While agreements like those between the DRC and Zambia are a start, our nations need to work more closely together, especially when it comes to issues like establishing a common external tariff (CET). This would help avoid a muddled approach to imports and make it easier for African countries to do business across borders.
We need to build our energy infrastructure so we can support processing and refining.
We must ensure that our governments are stable and that our streets are not plagued by violence, which drives away potential investors in droves.
We must avoid the human rights abuses that have plagued other extractive industries in Africa by ensuring that workplaces are safe. indigenous peoples are not at risk. Living conditions for workers meet universally accepted standards; the natural environment is protected; and children do not work when they should be in school.
As the world moves towards a low-carbon future, Africa has the opportunity to change where we are in the critical minerals value chain and, in turn, change our destiny. But there is enormous work to be done, and it must be done right. With the right partners and support, on our continent and worldwide, it will be.
Distributed by APO Group on behalf of the African Energy Chamber.