Extractive industries

© Unsplash With the global transition to cleaner technologies underway, Africa has the natural resources to race ahead. The continent is a major producer of the raw materials that will fuel the green revolution – including, for example, 70 per cent of the world’s cobalt, which is essential for electric-vehicle batteries. According to the United States Geological Survey, Africa also has some of the world’s largest untapped mineral reserves. If harnessed sustainably and strategically, these resources could foster green industrialisation and increase electrification, while building a better future for all Africans. At the moment, African countries are mainly involved in mineral exploration and extraction, and the few with processing facilities often generate low-value products. Meanwhile, countries outside of Africa are scrambling to develop their own critical-minerals strategies. In an effort to secure the resources needed for sustainable economic growth and national defence, they are eyeing the continent’s supply of rare earths. To ensure that African countries secure the greatest returns from extractive industries and that the continent’s strategic interests are not given short shrift, the African Union established the African Minerals Development Centre (AMDC). In addition to ensuring that the global rush for so-called “critical” minerals translates into a prosperous future, limiting environmental damage is at the top of the agenda, especially because nearly a quarter of Africa’s GDP is dependent on nature. It doesn’t help that the continent is staring down the barrel of climate change. On the heels of the Africa Climate Summit, which highlighted the importance of green minerals, the AU’s member states must ratify the AMDC statute. Any delay could prove costly to the continent’s management of its mineral wealth. The AMDC’s forthcoming African Green Minerals Strategy (AGMS) can guide African countries as they consider how to exploit their raw materials – critical to the global energy transition – in a strategic and sustainable manner. In the African context, “strategic” or “green” minerals are those that are used in clean-energy technologies and green industries, and those that are feedstocks into the mining supply chain, according to two main criteria in the AGMS. Built on four pillars – advancing mineral development, investing in human capital and technological capacity, building value chains, and promoting resource stewardship – the AGMS provides a framework for supporting green industry and establishing a larger presence in clean-tech supply chains. Encouragingly, nascent green industries – including electric-vehicle assembly plants – are starting to sprout up in several African countries. This demonstrates that the continent’s technical and manufacturing capabilities can be scaled up with supportive policies, skill-building programs, infrastructure development, and a favourable investment climate. The benefits of developing local industry and shifting output to value-added components are many: job creation, better technological capabilities, and a reduced reliance on imports, which together strengthen Africa’s economic sovereignty. The AGMS’s first objective is to accelerate local manufacturing of inputs for mining and processing strategic green minerals. Investing in local capabilities would create a more inclusive economy: as domestic industries thrive, communities would benefit directly from employment opportunities and skills development, which in turn contribute to shared prosperity. The next aim is to build more processing facilities on the continent, which would enable African countries to capture a greater share of the value chain, diversify their economies, and reduce their dependence on raw-material exports. Without this shift to higher value-added production, the continent will struggle to achieve economic resilience in an ever-changing global market. Lastly, the AGMS intends to expand Africa’s technical expertise and to increase resources for research, development, and innovation. Such an outcome would spur the growth of cutting-edge green technologies and position Africa as a hub for scientific progress, attracting talent and investment from around the globe. Of course, achieving these objectives requires a coordinated approach, including the establishment of common external tariffs on extraction inputs, processed minerals, and manufactured products. This would facilitate trade and collaboration among African countries, while also incentivizing environmentally responsible practices. Global demand for batteries, electric vehicles, and renewable energy equipment is surging, and Africa stands to claim a greater share of the clean-tech windfall. Contributing to these value chains should also improve African countries’ access to affordable and reliable energy and enhance mobility options on the continent. The AGMS framework can thus address problems unique to Africa, such as its energy deficit and transport challenges, while supporting broader global efforts to combat climate change. Marit Kitaw is Interim Director of the African Minerals Development Centre. Copyright: Project Syndicate, 2023.https://www.project-syndicate.org/ Accompanying this commentary is a video from Project Syndicate’s Climate & Development Finance: What Works? event, which you can view here.

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