Released April 26, 2024 | SUGAR LAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--As global demand for critical minerals surges, sub-Saharan Africa has the potential to reap up to US$2 trillion dollars in the coming decades.
According to the International Monetary Fund (IMF), the region--which comprises 48 countries-- is well positioned to contribute to the clean energy transition and is estimated to hold about 30% of the volume of world's proven critical mineral reserves. In its latest report, the International Monetary Fund (IMF) stated: "The latest International Energy Agency (IEA) 2050 Net Zero Emissions (NZE) scenario (IEA 2023) predicts a doubling and tripling of demand for nickel and cobalt, and a tenfold increase in demand for lithium between 2022 and 2050. Under the 2050 NZE scenario, the global market for critical minerals is poised for a significant upswing. Global revenues from the production of just four key minerals--copper, nickel, cobalt, and lithium--are estimated to total US$16 trillion over the next 25 years (in 2023-dollar terms). This boom bodes well for sub-Saharan Africa. The region stands to reap over 10% of these cumulated revenues--nearly US$2 trillion." Today, that figure stands at US$297 billion.
The IMF noted that the region is already a significant contributor to the production of minerals like cobalt, graphite, manganese, platinum-group metals and chromium. The Democratic Republic of the Congo dominates the global cobalt market with more than 70% of global output and approximately 50% of the world's proven reserves. Key manganese producers include South Africa, Gabon, and Ghana collectively accounting for more than 60% of global production. When it comes to lithium--the essential component of rechargeable batteries for mobile phones, laptops and electric vehicles (EVs)--countries like Zimbabwe, the Democratic Republic of the Congo and Mali "hold substantial yet-to-be-explored lithium deposits." In contrast, the forecast for the region's fossil fuel revenues "paints a less rosy picture," the IMF stated, presenting significant fiscal challenges for current fossil fuel exporters. Estimated at US$625 billion over the next 25 years in current dollar terms, "these revenues are modest at best, reflecting sub-Saharan Africa's smaller slice of global fossil fuel reserves and declining demand for fossil fuels on the path to net zero. This is further compounded by the higher carbon intensity (by 70 to 80% on average) and steeper extraction cost (by 15 to 20% on average) associated with the region's fossil fuels."
Industrial Info is tracking more than 1,200 mining projects in Africa worth US$137 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports. The European Union (EU) is keen to harness the critical mineral wealth of the region in order to reduce its reliance on countries like China for so much of its needs. At the end of last year, Industrial Info reported that the EU had cleared a series of major investments worth billions of dollars in a number of African nations. It signed memoranda of understanding (MOU) with the DRC and Zambia to develop critical raw materials value chains and boost transport connectivity. Along with the U.S., the Republic of Angola and the African Development Bank, it has also signed an agreement to develop the so-called "Lobito Corridor." This transport corridor will connect the southern part of the DRC and the northwestern part of the Republic of Zambia to regional and global trade markets via the Port of Lobito on Angola's Atlantic coast. The investment will extend the railway tracks 420 kilometers (km) across Angola, the DRC and Zambia. The EU investment strategy is seen as a response to massive Chinese investment in Africa's mining sector. For additional information, see November 6, 2023, article - Europe Turns to Africa For Critical Raw Materials.
While there is great opportunity in the critical minerals sector, it is not without risks. The potential for significant revenue from critical minerals hinges on developments in commodity prices, which can be highly volatile, and technological changes. "Fast-paced technological advancements, particularly in the field of electric vehicle batteries, could render certain minerals obsolete," the IMF stated. "Prudent and transparent resource management, and strategic fiscal planning are vital to successfully navigate these uncertainties and harness the region's mineral resources. For oil-exporting nations in the region, the shift away from fossil fuels requires a strategic recalibration of their economic and fiscal policies, underscoring the imperative of diversification in the face of global energy transitions."
Sub-Saharan Africa currently benefits by being a major exporter of minerals but the IMF highlighted that the region does very little on the processing front, which would be far more profitable. "Most sub-Saharan African countries export critical minerals primarily in their raw form, which tend to be lower value-added than processing activities. The economic disparity is evident in a simple market value comparison: raw bauxite fetches a modest US$65 per ton, whereas its processed counterpart, aluminum, commands a hefty US$2,335 per ton as of end 2023. The Democratic Republic of the Congo (DRC), accounting for 74% of global cobalt mining, sends 97% of its cobalt exports, mostly unprocessed, to China. Similarly, over 1,000 trucks are estimated to daily transport low-concentration, rock-form lithium from Zimbabwean mines to distant African ports, destined for China instead of undergoing local processing. This approach starkly contrasts with China and Indonesia, who have prioritized mineral processing for higher economic returns."
The IMF noted that by sticking to the lower value-added stages of extraction, countries risk losing substantial benefits from processing. "Developing local processing industries could significantly boost profits, increase tax revenues, create higher-skilled jobs, and enhance positive technological spillovers. Furthermore, transitioning from exports of raw minerals to producing refined minerals offers an opportunity for countries to diversify their economies and reduce their exposure to high price volatilities commonly associated with raw commodity markets."
It also recognizes that there are a variety of obstacles to many of those countries moving into large-scale processing. A major hurdle is securing financing for countries eager to build factories for mineral processing. "Public finances have been especially under strain, given the string of recent shocks. But money is only part of a larger puzzle. Domestic firms in the region lag behind in the know-how and expertise needed for the leap to sophisticated, more value-enhancing processing. The region's lack of infrastructure and energy system, too, looms as a sizable impediment."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
According to the International Monetary Fund (IMF), the region--which comprises 48 countries-- is well positioned to contribute to the clean energy transition and is estimated to hold about 30% of the volume of world's proven critical mineral reserves. In its latest report, the International Monetary Fund (IMF) stated: "The latest International Energy Agency (IEA) 2050 Net Zero Emissions (NZE) scenario (IEA 2023) predicts a doubling and tripling of demand for nickel and cobalt, and a tenfold increase in demand for lithium between 2022 and 2050. Under the 2050 NZE scenario, the global market for critical minerals is poised for a significant upswing. Global revenues from the production of just four key minerals--copper, nickel, cobalt, and lithium--are estimated to total US$16 trillion over the next 25 years (in 2023-dollar terms). This boom bodes well for sub-Saharan Africa. The region stands to reap over 10% of these cumulated revenues--nearly US$2 trillion." Today, that figure stands at US$297 billion.
The IMF noted that the region is already a significant contributor to the production of minerals like cobalt, graphite, manganese, platinum-group metals and chromium. The Democratic Republic of the Congo dominates the global cobalt market with more than 70% of global output and approximately 50% of the world's proven reserves. Key manganese producers include South Africa, Gabon, and Ghana collectively accounting for more than 60% of global production. When it comes to lithium--the essential component of rechargeable batteries for mobile phones, laptops and electric vehicles (EVs)--countries like Zimbabwe, the Democratic Republic of the Congo and Mali "hold substantial yet-to-be-explored lithium deposits." In contrast, the forecast for the region's fossil fuel revenues "paints a less rosy picture," the IMF stated, presenting significant fiscal challenges for current fossil fuel exporters. Estimated at US$625 billion over the next 25 years in current dollar terms, "these revenues are modest at best, reflecting sub-Saharan Africa's smaller slice of global fossil fuel reserves and declining demand for fossil fuels on the path to net zero. This is further compounded by the higher carbon intensity (by 70 to 80% on average) and steeper extraction cost (by 15 to 20% on average) associated with the region's fossil fuels."
Industrial Info is tracking more than 1,200 mining projects in Africa worth US$137 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports. The European Union (EU) is keen to harness the critical mineral wealth of the region in order to reduce its reliance on countries like China for so much of its needs. At the end of last year, Industrial Info reported that the EU had cleared a series of major investments worth billions of dollars in a number of African nations. It signed memoranda of understanding (MOU) with the DRC and Zambia to develop critical raw materials value chains and boost transport connectivity. Along with the U.S., the Republic of Angola and the African Development Bank, it has also signed an agreement to develop the so-called "Lobito Corridor." This transport corridor will connect the southern part of the DRC and the northwestern part of the Republic of Zambia to regional and global trade markets via the Port of Lobito on Angola's Atlantic coast. The investment will extend the railway tracks 420 kilometers (km) across Angola, the DRC and Zambia. The EU investment strategy is seen as a response to massive Chinese investment in Africa's mining sector. For additional information, see November 6, 2023, article - Europe Turns to Africa For Critical Raw Materials.
While there is great opportunity in the critical minerals sector, it is not without risks. The potential for significant revenue from critical minerals hinges on developments in commodity prices, which can be highly volatile, and technological changes. "Fast-paced technological advancements, particularly in the field of electric vehicle batteries, could render certain minerals obsolete," the IMF stated. "Prudent and transparent resource management, and strategic fiscal planning are vital to successfully navigate these uncertainties and harness the region's mineral resources. For oil-exporting nations in the region, the shift away from fossil fuels requires a strategic recalibration of their economic and fiscal policies, underscoring the imperative of diversification in the face of global energy transitions."
Sub-Saharan Africa currently benefits by being a major exporter of minerals but the IMF highlighted that the region does very little on the processing front, which would be far more profitable. "Most sub-Saharan African countries export critical minerals primarily in their raw form, which tend to be lower value-added than processing activities. The economic disparity is evident in a simple market value comparison: raw bauxite fetches a modest US$65 per ton, whereas its processed counterpart, aluminum, commands a hefty US$2,335 per ton as of end 2023. The Democratic Republic of the Congo (DRC), accounting for 74% of global cobalt mining, sends 97% of its cobalt exports, mostly unprocessed, to China. Similarly, over 1,000 trucks are estimated to daily transport low-concentration, rock-form lithium from Zimbabwean mines to distant African ports, destined for China instead of undergoing local processing. This approach starkly contrasts with China and Indonesia, who have prioritized mineral processing for higher economic returns."
The IMF noted that by sticking to the lower value-added stages of extraction, countries risk losing substantial benefits from processing. "Developing local processing industries could significantly boost profits, increase tax revenues, create higher-skilled jobs, and enhance positive technological spillovers. Furthermore, transitioning from exports of raw minerals to producing refined minerals offers an opportunity for countries to diversify their economies and reduce their exposure to high price volatilities commonly associated with raw commodity markets."
It also recognizes that there are a variety of obstacles to many of those countries moving into large-scale processing. A major hurdle is securing financing for countries eager to build factories for mineral processing. "Public finances have been especially under strain, given the string of recent shocks. But money is only part of a larger puzzle. Domestic firms in the region lag behind in the know-how and expertise needed for the leap to sophisticated, more value-enhancing processing. The region's lack of infrastructure and energy system, too, looms as a sizable impediment."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
