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How Africa's Mineral Wealth Can Supply The Clean Energy Transition

Updated: 7 days ago

Sub-Saharan Africa has a unique opportunity to capitalize on its abundant critical mineral reserves amidst the global shift towards clean energy. According to the International Energy Agency, the demand for nickel, cobalt, and lithium is set to surge dramatically between 2022 and 2050. With the region holding about 30% of the world’s proven critical mineral reserves, this boom could significantly transform its economy if managed well. Countries like the Democratic Republic of Congo, South Africa, Gabon, Ghana, Zimbabwe, and others are already key players in global mineral production, positioning the region to benefit substantially from rising demand.

Beyond merely extracting these valuable resources, the region can maximize its economic gains by developing local processing industries. Processing raw materials locally can drastically increase their value, create high-skilled jobs, and boost tax revenues, contributing to poverty reduction and sustainable development. For instance, raw bauxite can be transformed into aluminum, increasing its market value from $65 per ton to $2,335 per ton. However, current infrastructure limitations mean many minerals are exported in their raw form, missing out on potential economic benefits. Attracting foreign direct investment and fostering a stable, predictable investment environment through policy reforms can help develop these local processing capabilities.

A coordinated regional strategy is essential for leveraging the full potential of the region’s critical minerals. By fostering cross-border collaboration and integration, countries can create a larger, more attractive market for investments and develop regional value chains. Additionally, domestic reforms to strengthen financial markets, improve access to finance, and ensure accountable management of resources are crucial. These combined efforts could transform SSA into a leading hub for critical minerals, supporting the global transition to clean energy while driving regional growth and development.

Source: IMF

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