A recent report by The Conversation highlights the challenges faced by African countries in harnessing their mineral wealth to drive industrial growth and prosperity. The continent is rich in minerals crucial for green technologies, including cobalt, lithium, copper, and rare earths. However, most African countries export these minerals in raw or lightly processed form, rather than transforming them into higher-value materials and finished products. This limited value capture has resulted in minimal industrial activity, low-paying jobs, and limited economic growth.
The report, authored by Gideon Ndubuisi, Elvis Korku Avenyo, Solomon Owusu, and Woubet Kassa, analyzed the mineral endowments of African countries and their participation in the green technology value chain. The researchers found that 48 African countries have deposits, reserves, or production of at least one transition mineral. South Africa, Nigeria, and the Democratic Republic of Congo (DRC) are among the top mineral-rich countries, with South Africa having 24 of the 41 minerals identified. However, most countries individually account for only small global shares, limiting their influence in the market.
Trade data reveals that African countries have a limited presence in the global market for transition minerals. Apart from South Africa, Nigeria, and the DRC, most African countries export less than 1% of each mineral globally. For several minerals, such as nickel, rare earths, silver, and lithium, Africa's five largest exporters together supply less than 10% of world exports. This fragmentation limits the bargaining power of individual countries and makes it challenging for them to attract large processing plants and build complete supply chains.
The report identifies a lack of local processing of minerals as a significant weakness in African countries. While some countries, such as South Africa, DRC, Zambia, and Zimbabwe, do some processing, it often involves only crushing and concentrating ore, rather than producing finished products. This results in significant value being lost, as seen in the case of Congolese cobalt, which increases in value from $5.80 per kilogram to $16.20 per kilogram after local refining.
The study also notes that Asia, particularly China, is the leading importer of many minerals from Africa. China absorbs over 40% of Africa's annual mineral ore exports, perpetuating a familiar pattern of African countries mining raw materials while other countries turn them into more valuable products. This has resulted in African countries being largely invisible in green technology value chains, with Africa's global patent share across the technologies studied remaining below 0.4% between 2017 and 2023.
African governments are taking steps to change this narrative by asserting agency and implementing policies to gain more from their minerals. Many are changing mining laws, restricting exports, taking ownership stakes, and forming partnerships to increase processing, investment, jobs, and income. However, most countries are acting individually, which has its limitations. The report suggests that deeper regional cooperation could help African countries build industries and increase their bargaining power.
The report concludes that Africa's mineral strength is wasted if countries do not work together to build industries and transform their raw materials into higher-value products. Collective action and regional cooperation could lower costs, increase market access, and give African countries more power when negotiating with international buyers. By doing so, African countries can unlock the full potential of their mineral wealth and drive sustainable economic growth and industrial development.
Key points
- African countries export most transition minerals in raw or lightly processed form, limiting their industrial activity and economic growth.
- Regional cooperation and collective action can help African countries build industries, increase their bargaining power, and unlock the full potential of their mineral wealth.
- African governments are taking steps to assert agency and implement policies to gain more from their minerals, but individual actions have limitations.
