+27 71 448 3496

Africa’s critical minerals will power the worlds energy transition

Share Article
Africa’s critical minerals are expected to play a major role in the world energy transition. Image credit: Leon Louw for WhyAfrica

Africa’s critical minerals will power the worlds energy transition

Africa has a special role in powering global energy transition, with its critical mineral store expected to provide many opportunities for the continent in the next few years.

By Richard Blunt, Kieran Whyte, Marc Yudaken, Christopher Jones and Matthew Martin, all from law firm Baker McKenzie

Driven by the energy transition, the demand for critical minerals is expected to rise sharply, more than doubling by 2030 and quadrupling by 2050, with annual revenues reaching USD400- billion, according to the International Energy Agency’s World Energy Outlook 2022.

The growth in demand for major clean energy technologies and the need to deliver on the energy transition require huge quantities of critical minerals, for which announced supply capacity will not be adequate.

The market is recognising this, as demonstrated in recent price growth for many critical minerals (such as lithium, nickel and aluminium). This, in turn, has triggered increased investment in mineral exploration and production.

As one of the world’s top producers of many critical minerals, Africa has a special role in powering global energy transition, with its critical mineral store expected to provide many opportunities for the continent in the next few years.

Among others, the continent is a major producer (and home to huge undeveloped resources) of metals including cobalt, copper, bauxite, chromium, high purity iron ore, Platinum Group Metals (PGMs), lithium and Rare Earth Elements (REEs).

Increasing interest from the major players in Africa’s supply of raw materials is evident in recent policy announcements from the European Union and the United States.

The need to mitigate supply chain risk (Africa’s critical minerals will power the worlds energy transition)

Both the EU and the US have emphasised the need to mitigate commodity supply chain risks and develop strategic agreements with countries that are able to supply responsibly sourced critical minerals.

In March 2023, the European Commission proposed its Critical Raw Materials Act, which aims to secure the EU’s access to minerals and metals critical for net-zero technologies, including by strengthening international engagement, and facilitating extraction, processing and recycling.

In addition, the recently agreed Carbon Border Adjustment Mechanism regulation will charge importers of a number of key products from carbon intensive industries (for example steel, iron, cement and fertilisers) based on their embedded greenhouse gasses, in order to ‘level the playing field’ with domestically produced products that must pay the EU Emissions trading system charge.

The intention is to prevent the dilution or offset of EU carbon reduction efforts by increasing emissions outside its borders, through the relocation of production to countries that have less ambitious policies to fight climate change.

The EU also recently announced it was negotiating to source critical minerals from the Democratic Republic of Congo (home to much of the world’s cobalt), and that it intended to do the same with other African countries such as Rwanda, Gambia and Zambia. The EU already has an agreement in place with Namibia in this respect.

The importance of free trade agreements (Africa’s critical minerals will power the worlds energy transition)

Similarly, the United States signed the Inflation Reduction Act (IRA) into law in August 2022. Among other things, the law only permits subsidies for electric vehicles if 40% of their critical minerals were mined or processed in the US, or a country with which the US has a free trade agreement.

Other clean energy technologies such as wind and solar do not need domestically sourced critical minerals to qualify for the subsidies, but the Act includes a 10% bonus credit to incentivise companies to use locally sourced critical minerals in their clean energy components.

The IRA names 50 applicable critical and rare earth minerals for the energy transition, including cobalt, lithium, chromium and neodymium (used in turbine magnets), all abundant in Africa.

Converting demand into sustainable development (Africa’s critical minerals will power the worlds energy transition)

At present, most of Africa’s critical minerals are exported in the form of ores or concentrates. Certain countries in Africa, including Namibia and Zimbabwe have imposed export restrictions on some of their unprocessed critical minerals, such as lithium, noting that they are losing income by exporting the minerals as raw materials, and that they are planning to develop the capacity to process these minerals locally.

The African Continental Free-Trade Area (AfCFTA), implemented in 2021, has also acted as a strong impetus for African governments to address their infrastructure gaps, enhance and streamline supply chains, improve climate policies that fulfil net zero commitments, boost manufacturing capacity and overhaul regulation relating to trade, cross-border initiatives, investment-friendly policies and capital flows.

It is expected that the trade in mineral commodities in Africa will benefit from these reforms, and that (among other factors) this will result in African countries undertaking a more active role in the sustainable processing of metals and minerals, better capitalising on the continent’s vast mineral resource base.

For Africa, the focus now is firmly on how the global demand for critical minerals can be translated into the sustainable growth of its mineral mining operations and production facilities, and how it can be ensured that this growth will benefit the African continent and its people, not just in terms of the demand for critical minerals, but in how the continent can make use of its own resources to ramp up its energy transition and provide the continent with much needed access to clean power.

Consideration also needs to be given to the development and the implementation, in the near future, of new policies in the EU and US dealing with decarbonisation across the full commodity supply chain, which are intended to preserve current off-take markets for commodities in these regions.

The article was written by Richard Blunt, Partner and Co-chair of the Global Energy, Mining, Infrastructure (EMI) and Projects Practice Group, London, Kieran Whyte, Partner and Head of the EMI Sector Group, Johannesburg, Marc Yudaken, Partner, Corporate M&A, Johannesburg, Christopher Jones, Principal, Energy regulatory and Antitrust, Brussels, and Matthew Martin, Foreign Legal Specialist, North America – all Baker McKenzie

Africa’s critical minerals will power the worlds energy transition


WhyAfrica provides on the ground information and business intelligence about the sustainable utilisation and extraction of natural resources in Africa, and can assist your company through:  

  1. Membership:
  • WhyAfrica’s membership offers great business insights to you, your company, and clients.
  • Amongst many other benefits, we will publish editorial content about you or your company on the WhyAfrica online platform and on all WhyAfrica’s social media pages – the annual fee is R5,500 and you can find out more or subscribe here: https://www.whyafrica.co.za/product/membership/ 
  1. Sponsorship:
  • WhyAfrica’s annual 45-day African Road Trip takes place in July and August. We will visit more than 30 project sites and this year we plan to visit Angola, Zambia and Malawi. Sponsoring the Road Trip, or to be a WhyAfrica member, gives you unparalleled insight into the business environment of the countries that we travel to and the project sites we visit.
  • To be a member or sponsor allows you access to invaluable, on the ground, business intelligence and a great marketing opportunity for all companies doing business in Africa.
  • The main aim of our Road Trips is to promote Africa as an investment destination and to showcase Africa’s greatest companies, and projects to our large global audience, which includes a list of potential investors, venture capitalists and serial entrepreneurs.
  • To view the photos of last year’s Southern Africa Road Trip click on the gallery link or follow our Instagram account at why.africa https://www.whyafrica.co.za/road-trips/whyafrica-road-trips/. 
  1. Advertising:
  • We publish daily online articles on our WhyAfrica platform and post them on social media every day. Our combined online reach is more than 45,000. In-article banner ads are highly successful advertising tools as is advertising space on our website.
  • In addition to our bi-weekly newsletters, we publish two printed- and two interactive digital magazines per year. The printed magazines are distributed at major events and conferences throughout the year, and also on our WhyAfrica Road trips.
  • Digital magazines are e-mailed to all our subscribers and shared on our social media platforms. A copy of the latest edition is automatically attached to all our outgoing e-mails.
  • WhyAfrica magazines provide great marketing opportunities. There are also in-article and on-line advertising opportunities at exceptional rates. Contact me for more information on leon@whyafrica.co.za or give me a call.
  • To subscribe to WhyAfrica’s free newsletters and magazines click on the link and register: https://www.whyafrica.co.za/subscribe/  
  1. 4. Partnerships
  • Maximise your African exposure and link with our large business network through becoming one of only 10 WhyAfrica partners. We have only five prime partnership positions left for 2023, so contact me at leon@whyafrica.co.za before the end of March to get the best deal. 

Africa’s critical minerals will power the worlds energy transition


Share Article


AgricultureEnvironmental Management & Climate ChangeEnergyESGInfrastructureMiningPolitical EconomyTourism and ConservationWater Management