The demand for key transition minerals that Africa produces is expected to rise rapidly.
African countries could raise their GDP by at least $24 billion annually and create 2.3 million jobs through manufacturing and creating favourable trade policies, by investing more in the production of transition minerals.
This is according to new economic modelling from civil society network Publish What You Pay. Transition minerals are touted to help industries move away from fossil fuels, because they are useful in the construction of green energy tools and power sources.
East African Community member countries have many of those --copper, lithium, nickel, and cobalt-- found in Uganda, Burundi, Democratic Republic of Congo and Tanzania.
Based on governments’ current stated policies, demand for key transition minerals that Africa produces is expected to rise rapidly. Yet the continent is stuck at the bottom of energy transition value chains while most of the profits are made elsewhere in the world.
“Africa is unable to tap transition minerals because of inadequate local capital, Energy, infrastructure technology and African market for these resources,” said Isaac Danso Agyiri, research and policy manager for Tax Justice Network Africa, who was part of the team that reviewed the report.
Moreover, the vast majority of Africa's transition minerals are destined for manufacturing outside the continent.
According to the report, How Can Africa Make the Most of its Transition Minerals? A pledge for enhancing value addition for development and prosperity September 2024, released on Thursday, only two percent of the continent’s exports of energy transition minerals are destined for other African countries.
Demand for the continent’s transition minerals has significantly increased over time, following the arrival of modern renewable energy as countries transition to low-carbon economies.
Transition minerals are essential for technologies such as solar panels, wind turbines and electric vehicles.
They are core components of batteries, like those that power electric vehicles. Rare earth elements are part of the magnets that turn wind turbines and electric motors.
Across Africa, transition mineral production is currently dominated by DRC, Zambia and South Africa.
But there are concerns that their extraction is limited due to a combination of factors, including the technical knowhow.
“It is partly due to historical economic structures that insist that, it only makes market sense if we export our minerals in raw/ ore form at cheap prices and import finished and semi-finished products at much higher prices,” Agyiri said.
Africa is home to more than 40 percent of copper, lithium and nickel.
DRC alone holds over 60 percent of the world's cobalt reserves, a mineral used to make lithium-ion batteries.
In 2022, Africa exported around $29 billion in transition mineral products. That time, countries around the world reported sourcing $55 billion in transition minerals, and metals derived from them, from Africa.
And global demand is expected to increase further as the energy transition accelerates.
According to the report, the continent remains almost completely excluded from downstream and often more lucrative segments of value chains for these minerals, such as design, manufacturing, marketing and sales.
As a result, many voices are saying that, with the coming energy transition boom, “this time must be different,” and African countries must benefit from the sale of their minerals.
“What should we do? Beneficiation of our minerals and value addition now. Countries must act together and insist on value addition to these ores on the continent. Without that, the rest of the world will transition with our minerals and leave us behind, in darkness, and in poverty. Same as all the other precious minerals have not changed our destinies,” Agyiri said.
“In addition, African countries should strengthen public institutions, to ensure transparency and accountability in natural resource management, including the management of natural resource revenues.”
The report calls for renegotiating treaties, saying they are critical steps to empower states to implement regulations that ensure accountability in the transition mineral sector.
“We need a globally just energy transition that is truly transformative for mineral rich, poorer countries. Consumer regions must play a role in supporting these countries' ambitions to become more involved in value chains,” the report says.
“Consumer regions should not pressure African countries to abandon industrial policies that support domestic mineral processing and transformation.
"Instead, they should focus on fulfilling their financial and technology transfer commitments, fostering industrial capacity in partner countries, and bringing economic benefits to African citizens.”
“No-go zones and safeguards must be put in place to protect ecosystems and the rights of affected populations, including a fair, ongoing process of Free, prior and informed consent—the indigenous people’s right to give and withdraw consent to mining on their lands.”