IMF sees copper, nickel, cobalt, lithium boosting Sub-Saharan Africa’s GDP by 12%

Sub-Saharan Africa, home to 30 per cent of the world’s critical minerals could boost the region’s Gross Domestic Product, GDP by 12 percent says the International Monetary Fund, IMF

The IMF gave the prediction in its Regional Economic Outlook Analytical Note Sub Saharan Africa, with the theme: Digging for Opportunity: Harnessing -Sub-Saharan Africa’s Wealth in Critical Minerals April 2024, jointly authored by Wenjie Chen, Paola Ganum, Athene Laws, Hamza Mighri, Balazs Stadler, Nico Valckx, and David Zeledon. (AFR)

The Report further states that global revenues from just four key minerals—copper, nickel, cobalt, and lithium—are estimated to total $16 trillion over the next 25 years (in 2023-dollar terms).

Noting that under the 2050 NZE scenario, the global market for critical minerals is poised for a significant upswing, the Note stated that, “the region stands to reap over 10 per cent of these cumulated revenues—nearly $2 trillion in 2023-dollar terms.

“Countries with significant mineral reserves like the Democratic Republic of the Congo and South Africa, but also smaller countries like Guinea (bauxite), Mali (lithium), Mozambique (graphite), Zambia (copper), and Zimbabwe (nickel, platinum) are poised to benefit from this clean energy transition-induced mining boom.

The report however noted that sub-Saharan Africa carries out very little higher value-added processing of minerals, stating “Most sub-Saharan African countries export critical minerals primarily in their raw form, which tend to be lower value-added than processing activities.

The economic disparity is evident in a simple market value comparison, stating that raw bauxite fetches a modest $65 per ton, whereas its processed counterpart, aluminium, commands a hefty $2,335 per ton as of the end of 2023.1 Although countries in the region have deepened their involvement in the global 1 The raw bauxite spot price is from Mysteel Global; the aluminium spot price is from the London Metal Exchange. Both spot prices are as of December 31, 2023, Bloomberg Finance, L.P.

”The forecast for the region’s fossil fuel revenues paints a less rosy picture, presenting significant fiscal challenges for current fossil fuel exporters. Estimated at $625 billion over the next 25 years in current dollar terms, these revenues are modest at best, reflecting sub-Saharan Africa’s smaller slice of global fossil fuel reserves and declining demand for fossil fuels on the path to net zero.”

It maintains that the potential for significant revenue from critical minerals hinges on developments in commodity prices, which can be highly volatile, and technological changes (Boer and others 2021). Fast-paced technological advancements, particularly in the field of electric vehicle batteries, could render certain minerals obsolete.

“Thus, prudent and transparent resource management and strategic fiscal planning are vital to successfully navigate these uncertainties and harness the region’s mineral resources. For oil-exporting nations in the region, the shift away from fossil fuels requires a strategic recalibration of their economic and fiscal policies, underscoring the imperative of diversification in the face of global energy transitions (October 2022 Regional Economic Outlook: advancing beyond exporting raw materials to developing processing industries presents an even larger opportunity., is on the brink of a major transformation with the global move towards clean energy.

It further adds that a regional strategy built on cross-border collaboration and integration can leverage the diversity of minerals and create a larger, more attractive regional market for much[1]needed investment.

“Moreover, structural reforms at the country level to nurture domestic firms in processing and supporting industries, while steering clear of inward-looking industrial policy, will amplify the gains from these minerals. Unlocking this potential can drive broader economic development, encourage technology transfer, and ensure sustainable, higher returns from the region’s critical mineral resources. Be it extraction or processing, this transition requires sound fiscal regimes and policies to manage these gains responsibly with revenues from critical minerals poised to rise significantly over the next two decades.” The report added.