Africa could gain $24bn in revenues and 2.3 million jobs if it introduces manufacturing and trade policies to extract more value from its transition minerals, according to a civil society network.
Transition minerals are resources used to make renewable energy technologies. Africa is home to more than 40% of minerals like copper, lithium and nickel, used in the production of renewable energy technologies. Egypt, Morocco, Namibia, Madagascar, and Mozambique are among the nations that could generate billions of dollars from transition minerals.
Despite this potential, Africa is often at the bottom of energy transition value chains. The bulk of Africa’s transition minerals are exported in raw form to be manufactured outside Africa with only 2% of the exports destined for other African countries. Africa remains largely excluded from lucrative segments of the mineral value chains including manufacturing, sales, design, and marketing.
The report from Publish What You Pay emphasises the need for African countries to specialise in the parts of the value chain where they are most competitive. Rather than retain the entire value chain of minerals within their own nation, African countries should pursue collaborative strategies to build value chains, it suggests.
“African countries can make the most of their transition minerals by adding value to them: transforming them into products that can then be exported at better prices, and/or using them to address Africa’s own development needs, including building clean and affordable energy systems,” the report states.
“Governments should work together to process, refine and manufacture energy transition minerals on the continent, specialising in the parts of the value chain in which they are most competitive.”
AfCFTA can help
Regional trade agreements like the African Continental Free Trade Area (AfCFTA) can ensure Africa becomes competitive in the renewable energy market by trading minerals locally.
“(Governments should) finalise the planned African Continental Free Trade Area (AfCFTA) and ensure it enables African countries to access each others’ transition minerals and clean energy components and technologies at lower prices, helping them to build domestic industries,” it states.
Adam Anthony, chair of Publish What You Pay’s Africa steering committee, said the trade agreement will make it easier to export and import the minerals within Africa.
“At the moment, only 2% of transitional minerals are exported within Africa the rest goes outside. AfCFTA will facilitate intercontinental trade which is now largely missing,” he says.
The report also calls for new safeguards for communities in areas where transitional minerals are extracted.
“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.”
Accountability of the entire transition mineral value chain must be strengthened with resource-rich states adopting comprehensive laws for public participation, benefit sharing, and due diligence, the report says. There is also a need to renegotiate investor-state dispute settlement mechanisms in bilateral investment treaties in order to empower states to implement accountability regulations in the transition mineral sector, it says.
Marit Kitaw, interim director of the African Minerals Development Centre, an agency of the African Union, said: “This research shows that value addition needs to become the cornerstone of our approach.”