Africa’s critical mineral resources, a boon for intra-African trade and regional integration

 

Africa – rich in critical minerals – will accelerate intra-continental trade and harness its natural resources for sustainable development by rolling out effective trade policies, to benefit from the global rush for green energy transition.

With approximately 30% of the world’s mineral reserves, including cobalt, lithium, and nickel, which are considered essential for the green transition, African countries need to exploit these resources to drive its development, particularly trade and industrialization, experts say.

An Expert Group Meeting (EGM) on Africa’s Critical Minerals in the Context of Trade Policy hosted by the African Trade Policy Centre (ATPC) of the United Nations Economic Commission for Africa (ECA) on December 16–17, 2024 in Addis highlighted that Africa already has the right strategies and policies in place to harness its mineral resources. However, what is missing is deliberate action to realise this potential as the continent risks losing the full benefits of these critical minerals to global investors.

Speaking at the opening of the EGM, ECA Deputy Executive Secretary, Antonio Pedro, stressed it was time for Africa to leverage its political and economic integration for development. The continent already has policies to promote the development of its mineral resources.

“There is no reason why we should have a repeat of the scramble for Africa, especially at a time when greater political and economic integration has also taken place at the regional and continental levels,” Mr. Pedro said, pointing that supportive continent-wide policies such as the African Mining Vision (AMV), the African Commodity Strategy and now the African Green Minerals Strategy have been adopted across Africa.

Research by the ECA shows that demand for critical minerals will drive the quest to decarbonize economies and to reach net-zero emissions by 2050. It is estimated that the transition from fossil fuels to clean energy will create demand for 3 billion tons of minerals and metals to deploy solar, wind, and geothermal energy by 2050. For example, the Democratic Republic of Congo alone supplies about 70 percent of the global cobalt market, a mineral critical in electric vehicle battery production.

Critical minerals, sought after for just energy transition, could power Africa’s development and sustainable future, according to United Nations Conference on Trade and Development (UNCTAD) which has identified critical minerals as a key revenue generator for governments to finance development and lift millions of Africans out of poverty.

Africa could be the go to industrialization destination by adding value to the critical minerals on the continent, argued Mr. Pedro. The value addition of critical minerals could boost e-mobility in Africa, while creating decent jobs and make Africa a competitive hub for green industrialization.

Africa is home to significant reserves of critical energy transition minerals such as 55% of cobalt, 47.65% of manganese, 21.6% of natural graphite, 5.9% of copper, 5.6% of nickel, 1% of lithium, and 0.6% of iron ore globally, according to UNCTAD.

Research shows that Africa is yet to fully realise the potential of its mineral resources as it estimated that African countries generate only about 40% of the revenue they could potentially collect from these resources.

The meeting noted that the growing global demand for critical minerals, in an opportunity for Africa to maximise its revenues from mineral exploitation, value addition and the development of minerals-based regional value chains to spur industrialisation. This can be done through leveraging Africa’s trade and integration programme, including its Regional Economic Communities (RECs) and the African Continental Free Trade Area (AfCFTA).

The AfCFTA represents a market of 1.3 billion people and a combined GDP of over US$3.4 trillion but intra-African trade accounts for only 15% of the continent’s total trade.

The EGM considered the current demand for critical minerals in the broader historical and intellectual context of commodity dependence, examined Africa’s recent experiences dealing with commodities, and explored the role of Africa’s trade and integration policy to safeguard Africa’s interests internally and boost its negotiating power in its dealings with external partners.

The EGM which featured panels led by prominent experts and researchers from the African Union Commission, United Nations agencies, regional development banks, think tanks, and the private sector, drew a number of recommendations for action. It recommended that Africa’s commitment to trade-led economic integration should be leveraged to support the development of minerals-based regional and continental value chains and economic diversification.

Furthermore, the meeting called for further research to inform actionable policy recommendations. A recommendation was agreed to conduct a baseline study to understand how African minerals are used and traded today and what lessons Africa can learn from its own experiences dealing with commodity-booms and busts in the past.

Distributed by APO Group on behalf of United Nations Economic Commission for Africa (ECA).