Sub-Saharan Africa stands to reap over 10 percent of global revenue from critical minerals such as copper, nickel, cobalt, and lithium, according to the International Monetary Fund (IMF).
In a recent report titled ‘Harnessing Sub-Saharan Africa’s Critical Mineral Wealth, the IMF said these cumulated revenues could correspond to an increase in the region’s GDP by 12 percent or more by 2050.
The report noted that with growing demand, proceeds from critical minerals are poised to rise significantly over the next two decades.
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“Global revenues from the extraction of just four key minerals—copper, nickel, cobalt, and lithium—are estimated to total $16 trillion over the next 25 years, in 2023-dollar terms. Sub-Saharan Africa stands to reap over 10 percent of these cumulated revenues, which could correspond to an increase in the region’s GDP by 12 percent or more by 2050.”
From electric vehicles to solar panels to future innovations, the global transition to clean energy is set to further heighten demand for critical minerals.
According to the report, between 2022 and 2050, demand for nickel will double, cobalt triple and lithium rise tenfold, according to the International Energy Agency.
With sub-Saharan Africa estimated to hold about 30 percent of the volume of proven critical mineral reserves, this transition—if managed properly—has the potential to transform the region, the latest Regional Economic Outlook reports, the IMF said.
It said, Sub-Saharan Africa is already at the center of global critical mineral production. The Democratic Republic of Congo accounts for over 70 percent of global cobalt output and approximately half the world’s proven reserves. South Africa, Gabon and Ghana collectively account for over 60 percent of global manganese production. Zimbabwe, alongside the Democratic Republic of Congo and Mali, hold substantial but yet-to-be-explored lithium deposits. Other countries with significant critical mineral reserves include Guinea, Mozambique, South Africa, and Zambia.
The report said that the region can generate even greater windfalls by not only exporting raw materials but processing them as well. Raw bauxite, for instance, fetches a modest $65 per ton, but when processed into aluminum it commands a hefty $2,335 per ton, in end-2023 prices. Yet the thousand trucks a day that carry unprocessed lithium from Zimbabwe to ports for shipping to China show that local processing options for critical minerals are too often limited.
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“Developing local processing industries could significantly boost value added, create higher-skilled jobs, and increase tax revenues—thereby also supporting poverty reduction and sustainable development. By diversifying their economies and moving up the value chain, countries will become less exposed to volatile commodity prices, and more able to protect themselves against exchange rate volatility and foreign currency reserve pressures.
“Foreign direct investment can help provide the capital and expertise to develop mineral processing industries, but the absence of a substantial regional market makes local processing investments less enticing. Policymakers need to remedy this,” the report stated.
The report written by Wenjie Chen, deputy division chief, Nico Valckx, senior economist, and Athene Laws, economist, from the IMF’s African department, said a regional strategy built on cross-border collaboration and integration can create a larger, more attractive regional market for much-needed investment.
