The accelerated renewable energy transition and the rocketing demand for critical minerals have opened a booming economic avenue for Africa, throwing a major lifeline to countries often viewed to be on the margins of global economic and political activity.
But will the continent effectively take advantage of the critical minerals buzz, and maximise their production for local benefits, particularly within the context of Africa-China relations.
Africa possesses significant reserves of the minerals, such as cobalt, graphite, lithium, nickel and a wide range of rare earth metals, essential for batteries, solar panels and other green technologies that underpin the energy transition from fossil fuels to renewables.
Africa’s critical mineral production is poised for rapid growth, as the continent, which has historically dominated the supply of cobalt is set to diversify into other minerals and rare earth metals. Global green transition is re-energising China’s investments in Africa as demand for critical minerals used in electric vehicles, batteries and renewable energy industries rocket.
Unsurprisingly, resource-rich nations such as South Africa, Angola, the Democratic Republic of the Congo (DRC), Nigeria, Egypt, Liberia, Algeria, Guinea, Morocco and Zimbabwe, made up China’s largest trading partners in Africa during the first quarter of 2024.
China’s growing demand for critical metals and minerals to power its industries is fuelling a boom in Chinese investments and construction deals in Africa.
The Griffith Asia Institute at Griffith University in Brisbane, Australia says African countries that have a Belt and Road Initiative (BRI) co-operation agreement with China saw a 47% jump in Chinese construction contracts and a 114% increase in investments in 2023 compared with 2022.
Contrary to speculations that Chinese investment under the BRI in Africa and elsewhere in the world will slow down, a steady growth trend, with some diversification towards smart green technologies and renewable energy transition, can be easily discerned.
In 2023, China-Africa trade jumped to $282 billion, and there is much room and potential to grow beyond the obstacles induced by the Covid-19 pandemic slowdown. The Chinese Customs data shows that growing imports of critical minerals and metals, combined with higher commodity prices, drove two-way trade increase between Africa and China by nearly 6%, to $70.86bn, year on year in the first quarter of 2024.
While in 2023, African Belt and Road countries reportedly saw a 47% increase in Chinese construction contracts and 114% rise in investments, these are set to expand as more critical minerals and green transition projects are planned.
Furthermore, China plans to spend $1bn to revamp the Tanzania-Zambia railway line, connecting Zambia’s copper belt region with the Tanzanian port of Dar es Salaam under the BRI. The Tanzania-Zambia railway project will transform logistics and associated small- and large-scale industries in the SADC region, which has historically relied on road transport.
In the medium term, Africa is poised to continue to be central in providing critical minerals to the world and Chinese markets. According to Benchmark Source, Africa is set to play a major role in green energy transition as China invests heavily across the continent to help secure access to much-needed critical minerals.
Benchmark further suggests that 83% of forecast lithium supply is set to come from projects with some form of Chinese involvement. About 75% of mined cobalt comes from Africa, mostly the DRC, with the continent set to maintain about 69% of the global market share until 2030.
Lithium production output is set to increase to about 12% of global supply, while the continent has much potential to diversify into other minerals and rare earth metals. Africa also boasts rich flake graphite reserves, whose production is expected to grow from 19% of global supply through 2024 to 39% or so in 2030.
As the green tech industry expands and grows in China, Africa is set to benefit from growth-in-demand-driven uptake of clean energy technologies in China and across the world.
Under the BRI and the Forum on China-Africa Cooperation (Focac), China has demonstrated its effective capacity and ability to finance and execute infrastructure projects which could be replicated for green transition projects in Africa, further reinforcing China’s position as the preferred development partner in the continent.
Furthermore, China has evolved to play a major role in critical minerals supply chains, production of key inputs for decarbonisation, taking a leading role in the industries of tomorrow as the primary source or value-added refiner of cobalt, copper, graphite, lithium, neodymium and nickel, among others.
As a global leader in the production of electric vehicles, solar panels, and lithium-ion batteries, China is set to absorb, and provide a massive market for rare earth elements — a group of 17 metallic substances needed in trace amounts to produce numerous dual-use technologies, driving the gains of green transition globally, as well as in Africa.
But Africa will need to make sure that the new economic opportunities emanating from the demand for critical minerals does not pass as another missed opportunity.
Indeed, the continent does not and has never suffered from a lack of natural resources but rather, a resource curse, a combined mix of domestic and international factors which create cheap resources leakages without evident economic and social development.
Now, despite Africa’s growing presence in the mining of critical raw materials, it remains a bit player in the value chain further downstream. Maximising domestic national benefits will require targeted continental and regional policies that promote the development of regional value chains, fostering regional collaboration towards economic diversification.
African governments should also focus on developing domestic processing capacity, supporting socially and environmentally responsible mining, and building sustainable and reliable sources of energy, while addressing many other challenges that have hampered earlier efforts to promote mineral value addition on the continent.
There is much talk about value addition across the continent, increasing the amount of value African countries could realise before the minerals are exported. Countries such as Namibia and Zimbabwe among others have banned the exports of non-beneficiated ores of critical minerals including lithium.
Namibia has broadened the cohort of minerals under such regulation to include unprocessed lithium, cobalt, manganese, graphite and rare earth minerals. However, proactive co-operative positive-sum interventions will probably have more buy-in and support from international partners than punitive policies which may violate World Trade Organization regulations.
For its part, China has laid more friendly mutually beneficial partnerships under the BRI and Focac, providing no-strings-attached capital to the continent. African leaders should, therefore, leverage on these frameworks, the political will and friendly relations with China to ensure that the benefits from critical minerals and green transition are broadly socio-economically transformative for the continent.
Gideon Chitanga, PhD, is a Post Doc researcher at the Centre for Africa-China Studies, University of Johannesburg.