The world's journey to a decarbonised energy future requires a shift towards the development of low-carbon technologies.
The development of these low-carbon technologies in the areas of solar power, electric vehicles, battery storage and green hydrogen are driving an increase in the production of minerals and metals such as copper, lithium, nickel, cobalt, graphite, and rare earth elements, collectively known as critical minerals.
As this demand intensifies, it could offer untold opportunities for resource-producing regions like Africa.
In the past five years, the demand for critical minerals has seen the market double, reaching USD 320 billion in 2022. In the past year alone, the demand for lithium has risen by 30%.
Demand is projected to continue on this trajectory, more than doubling again by 2030 and quadrupling by 2050. Annual revenues are projected to reach USD US400 billion by 2050.
Critical minerals therefore present trade and investment opportunities for countries with reserves.
For example, it could revolutionise African economies - a region rich in natural resources but which is all too often exploited in the global scramble towards a clean energy transition.
The scramble for Africa's critical minerals
Africa holds 30% of the world's critical mineral reserves, many of which are critical components of many clean energy applications.
The Democratic Republic of Congo (DRC) dominates the global cobalt market with over 70% of global output and approximately 50% of the world's proven reserves.
South Africa, Gabon and Ghana collectively account for over 60% of global manganese production. In addition, lithium is produced in Zimbabwe, South Africa, DRC and Namibia. Ghana and Mali will soon start producing lithium in commercial quantities.
Chinese mining companies produce about 90% of the lithium from Africa and production is expected to triple in 2024 reaching 10% of the global supply, compared to 2023 when the region contributed only 4% to global lithium production.
China currently dominates the production of these critical minerals in Africa, as well as global supply chains.
As the leading producer of 20 critical raw materials, China accounts for approximately 60% of worldwide production and 85% of processing capacity.
This gives China a geostrategic presence and influence in Africa allowing it to further leverage its competitive advantage in global supply chains.
China already wields this market power in coercive ways by placing restrictions on critical minerals trade, blocking supply to Japan and threatening the supply chains of US defence contractors.
China's dominance in the production of critical minerals poses geopolitical and mineral security threats to western economies, whose response is to adopt policies aimed at diversifying their supply chains.
For instance, the US in December 2022 signed a joint strategic partnership with the DRC and Zambia on critical minerals value chains. The EU signed two strategic partnerships with the same countries on critical minerals in October 2023.
In June 2024, the South Korean government pledged to increase development aid for Africa to USD 10 billion over the next six years as it looks to tap the continent's rich mineral resources.
The Critical Minerals Dialogue launched by South Korea and Africa, aims to set an example for a stable global supply chain through cooperation and sustainable development.
This focus on minerals in Africa centrally positions the continent in global supply chains with significant opportunities and challenges.
Investing in adding value locally
Historically, Africa has not benefited from its resources due to poor governance, exploitation by multinational mining companies and a lack of value addition and processing. Currently, Africa's participation in critical mineral markets represents little more than sites of extraction.
Critical minerals from Africa are exported to China who invest heavily in domestic mineral processing and value-adding capacity. This extractive mode reproduces colonial legacies.
However, opportunity exists for investment in local processing of critical minerals in Africa with some nations - Tanzania, Zimbabwe, Namibia and others - now imposing export restrictions to promote value being added domestically. More recently, Zimbabwe and Ghana have demanded the processing of lithium ore into concentrate before it is exported.
In Zimbabwe a lithium processing plant has been constructed by Prospect Lithium Zimbabwe, a subsidiary of Chinese company Zhejiang Huayou Cobalt, with capacity to process 4.5 million metric tonnes of hard rock lithium into concentrate for export per year.
Ghana has recently granted a mining lease to an Australian company to mine lithium. Under the terms of the mining lease, they will explore the possibility of establishing a processing plant in Ghana.
While opportunities exist for many African countries to participate in local processing activities, a major bottleneck is the lack of infrastructure and technology to enable these activities. To process and add value, there is a need to pull together capabilities, capital, skills, technical know-how and trade opportunities across multiple countries.
African countries could leverage ongoing critical minerals agreements with major players to pull together resources including capital, skills and technology to invest in downstream activities.
Investment in processing critical minerals in Africa should underpin agreements between mining companies and African governments.
Investment in downstream activities would increase the value of Africa's critical minerals on the international market, create jobs for the enormous youth population in Africa, and drive the growth of other sectors of African economies.
Emerging social and ecological problems
However, although the rush for Africa's critical minerals could drive trade, investments and innovations in the resources sector, numerous challenges are imminent without strong resource governance.
Already, mining in Africa poses serious social and ecological problems: land degradation, loss of biodiversity, water pollution, displacement of communities, human rights abuses and child labour, among others.
Increasing investments in exploration and mining can also reinforce and reproduce relics of past colonial extractions.
Hard rock lithium drilling and blasting generates significant pollution, causes biodiversity loss, dislocates fauna and affects community infrastructure. Communities around large lithium and other critical mineral deposits in Africa have been displaced to make way for large-scale mines.
Communities around the Ewoyaa Lithium project in Ghana will be relocated to make way for the mine. Many communities throughout Africa have been and will be displaced to make way for large-scale mining projects in the critical minerals sector, raising questions of a just energy transition.
The Sandawana lithium mine of Zimbabwe is already attracting thousands of artisanal diggers working in unsafe conditions, with reports of child labour and miners being buried by a mine collapse.
In the DRC, where over 70% of cobalt mining is undertaken to provide global big tech companies with the critical minerals for rechargeable lithium-ion batteries and EVs, 40,000 artisanal miners are child labourers as young as six.
This represents a social, political and ecological scourge affecting the resource sector in Africa that will have long-term repercussions.
With ethical investments, shared and safe innovations and strong resource governance, critical minerals could drive energy transitions and be a springboard for African economic transformation; one that ensures justice, sustainability and local ownership.
However, the absence of serious resource governance reform relegates Africa to its historical colonial role as supplier of raw materials for the energy and economic transition of the rest of the world.
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