{
  "title": "Harnessing Sub-Saharan Africa’s Critical Mineral Wealth",
  "publication": "IMF News, April 29, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/04/29/cf-harnessing-sub-saharan-africas-critical-mineral-wealth",
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  "summary": "The region has an opportunity to develop critical minerals markets and processing industries to maximize the coming boom.",
  "authors": [
    "Wenjie Chen"
  ],
  "publishDate": "2024-04-29",
  "sections": [
    {
      "heading": "Key facts and context",
      "content": "- Between 2022 and 2050, demand for nickel will double, cobalt triple and lithium rise tenfold, according to the International Energy Agency.\n- Sub-Saharan Africa is estimated to hold about 30 percent of the volume of proven critical mineral reserves.\n- The Democratic Republic of Congo accounts for over 70 percent of global cobalt output and approximately half the world’s proven reserves.\n- South Africa, Gabon and Ghana collectively account for over 60 percent of global manganese production.\n- Zimbabwe, alongside the Democratic Republic of Congo and Mali, hold substantial but yet-to-be-explored lithium deposits.\n- Other countries with significant critical mineral reserves include Guinea, Mozambique, South Africa, and Zambia."
    },
    {
      "heading": "Economic potential and projections",
      "content": "- Global revenues from the extraction of copper, nickel, cobalt, and lithium are estimated to total $16 trillion over the next 25 years, in 2023-dollar terms.\n- Sub-Saharan Africa stands to reap over 10 percent of these cumulated revenues.\n- This could correspond to an increase in the region’s GDP by 12 percent or more by 2050.\n- The report notes high uncertainty around these estimates due to volatile commodity prices and unpredictability of technological innovation."
    },
    {
      "heading": "Value addition beyond extraction",
      "content": "- Example of value capture: raw bauxite fetches $65 per ton, while processed aluminum commands $2,335 per ton, in end-2023 prices.\n- Current bottlenecks: limited local processing — illustrated by the “thousand trucks a day” carrying unprocessed lithium from Zimbabwe to ports for shipping to China.\n- Benefits of local processing:\n  - Significantly boost value added.\n  - Create higher-skilled jobs.\n  - Increase tax revenues.\n  - Support poverty reduction and sustainable development.\n  - Reduce exposure to volatile commodity prices, exchange rate volatility, and foreign currency reserve pressures."
    },
    {
      "heading": "Role of foreign direct investment and market size",
      "content": "- Foreign direct investment can provide capital and expertise for processing industries.\n- Lack of a substantial regional market reduces the attractiveness of local processing investments.\n- Policymakers need to expand and integrate markets to attract investment."
    },
    {
      "heading": "Regionally coordinated policies and integration",
      "content": "- A regional strategy with cross-border collaboration can create a larger regional market and leverage mineral diversity.\n- Sub-Saharan Africa’s anticipated population boom, rapid urbanization, and industrialization will likely increase domestic demand for renewable energy and processed minerals.\n- The African Continental Free Trade Area can help reduce trade barriers, develop infrastructure, unite fragmented markets, and form regional value chains.\n- Examples of regional cooperation:\n  - Democratic Republic of the Congo and Zambia collaborating on battery production for two- and three-wheeled electric vehicles.\n- Policy harmonization priorities:\n  - Simplify bureaucratic procedures.\n  - Harmonize mining regulations across borders.\n  - Minimize environmental impacts to unlock green finance.\n  - Strengthen the Africa Mining Vision (launched in 2009) as a key framework."
    },
    {
      "heading": "Domestic reforms and institutional capacity",
      "content": "- Caution urged on applying local content requirements that mandate use of local materials and labor.\n- Many inward-looking policies can cause inefficiencies, market distortions, and increased costs.\n- Export bans on raw materials can backfire and cause production to fall.\n- Recommended domestic actions:\n  - Strengthen domestic financial markets and improve access to finance.\n  - Leverage fintech innovations to support firms in the mining sector that face difficulties securing traditional financing.\n  - Ensure accountable and transparent institutions, appropriate tax regimes, and sound public financial management to manage resource windfalls responsibly."
    },
    {
      "heading": "Policy recommendations (concise)",
      "content": "- Pursue a regional strategy to build a larger, integrated market for processing and value chains.\n- Harmonize mining regulations and simplify procedures to foster a predictable investment environment.\n- Develop infrastructure and reduce trade barriers through regional integration (including the African Continental Free Trade Area).\n- Design local content and trade policies carefully to avoid distortions; avoid counterproductive export bans.\n- Strengthen environmental safeguards to attract green finance.\n- Improve domestic financial intermediation and explore fintech solutions to expand access to finance for mining-related firms.\n- Build accountable, transparent institutions and sound public financial management to manage revenues and support development goals.\n\nIMF, \"Harnessing Sub-Saharan Africa’s Critical Mineral Wealth\", April 29, 2024.\n\n---\n\n Content in this bundle\n\n- Digging for Opportunity: Harnessing Sub-Saharan Africa’s Wealth in Critical Minerals\n  - Digging for Opportunity: Harnessing Sub-Saharan Africa’s Wealth in Critical Minerals (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Digging for Opportunity: Harnessing Sub-Saharan Africa’s Wealth in Critical Minerals (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- APRIL 2024 REGIONAL ECONOMIC OUTLOOK\n- F&D MAGAZINE: A CRITICAL MATTER\n- PODCAST: SSA LATEST OUTLOOK\n- CHART OF THE WEEK: QUALITY EDUCATION FOR SSA GROWTH\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/04/29/cf-harnessing-sub-saharan-africas-critical-mineral-wealth"
    }
  ],
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    "[Markdown version](/en/news/articles/2024/04/29/cf-harnessing-sub-saharan-africas-critical-mineral-wealth/index.md)",
    "[Structured JSON version](/en/news/articles/2024/04/29/cf-harnessing-sub-saharan-africas-critical-mineral-wealth/index.json)",
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    "Authors: Wenjie Chen",
    "Published: April 29, 2024",
    "Between 2022 and 2050, demand for nickel will double, cobalt triple and lithium rise tenfold, according to the International Energy Agency.",
    "Sub-Saharan Africa is estimated to hold about 30 percent of the volume of proven critical mineral reserves.",
    "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.",
    "Global revenues from the extraction of 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.",
    "This could correspond to an increase in the region’s GDP by 12 percent or more by 2050.",
    "The report notes high uncertainty around these estimates due to volatile commodity prices and unpredictability of technological innovation.",
    "Example of value capture: raw bauxite fetches $65 per ton, while processed aluminum commands $2,335 per ton, in end-2023 prices.",
    "Current bottlenecks: limited local processing — illustrated by the “thousand trucks a day” carrying unprocessed lithium from Zimbabwe to ports for shipping to China.",
    "Benefits of local processing:",
    "Foreign direct investment can provide capital and expertise for processing industries.",
    "Lack of a substantial regional market reduces the attractiveness of local processing investments.",
    "Policymakers need to expand and integrate markets to attract investment.",
    "A regional strategy with cross-border collaboration can create a larger regional market and leverage mineral diversity.",
    "Sub-Saharan Africa’s anticipated population boom, rapid urbanization, and industrialization will likely increase domestic demand for renewable energy and processed minerals.",
    "The African Continental Free Trade Area can help reduce trade barriers, develop infrastructure, unite fragmented markets, and form regional value chains.",
    "Examples of regional cooperation:",
    "Policy harmonization priorities:",
    "Caution urged on applying local content requirements that mandate use of local materials and labor.",
    "Many inward-looking policies can cause inefficiencies, market distortions, and increased costs.",
    "Export bans on raw materials can backfire and cause production to fall.",
    "Recommended domestic actions:",
    "Pursue a regional strategy to build a larger, integrated market for processing and value chains.",
    "Harmonize mining regulations and simplify procedures to foster a predictable investment environment.",
    "Develop infrastructure and reduce trade barriers through regional integration (including the African Continental Free Trade Area).",
    "Design local content and trade policies carefully to avoid distortions; avoid counterproductive export bans.",
    "Strengthen environmental safeguards to attract green finance.",
    "Improve domestic financial intermediation and explore fintech solutions to expand access to finance for mining-related firms.",
    "Build accountable, transparent institutions and sound public financial management to manage revenues and support development goals.",
    "**Digging for Opportunity: Harnessing Sub-Saharan Africa’s Wealth in Critical Minerals**",
    "[APRIL 2024 REGIONAL ECONOMIC OUTLOOK](https://www.imf.org/en/Publications/REO/SSA/Issues/2024/04/19/regional-economic-outlook-for-sub-saharan-africa-april-2024)",
    "[F&D MAGAZINE: A CRITICAL MATTER](https://www.imf.org/en/Publications/fandd/issues/2023/12/A-critical-matter-Evans-Santora-STUERMER)",
    "[PODCAST: SSA LATEST OUTLOOK](https://www.imf.org/en/News/Podcasts/All-Podcasts/2024/04/23/AFR-REO-April-2024)",
    "[CHART OF THE WEEK: QUALITY EDUCATION FOR SSA GROWTH](https://www.imf.org/en/Blogs/Articles/2024/04/25/sub-saharan-africas-growth-requires-quality-education-for-growing-population)",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
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