## Harnessing Sub-Saharan Africa’s Critical Mineral Wealth

_IMF News, April 29, 2024_

## Source details

**Canonical URL:** [Harnessing Sub-Saharan Africa’s Critical Mineral Wealth](https://www.imf.org/en/news/articles/2024/04/29/cf-harnessing-sub-saharan-africas-critical-mineral-wealth)

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## Bibliographic details
- Authors: Wenjie Chen
- Published: April 29, 2024

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### Key facts and context
- 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.

### Economic potential and projections
- 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.

### Value addition beyond extraction
- 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:
  - Significantly boost value added.
  - Create higher-skilled jobs.
  - Increase tax revenues.
  - Support poverty reduction and sustainable development.
  - Reduce exposure to volatile commodity prices, exchange rate volatility, and foreign currency reserve pressures.

### Role of foreign direct investment and market size
- 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.

### Regionally coordinated policies and integration
- 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:
  - Democratic Republic of the Congo and Zambia collaborating on battery production for two- and three-wheeled electric vehicles.
- Policy harmonization priorities:
  - Simplify bureaucratic procedures.
  - Harmonize mining regulations across borders.
  - Minimize environmental impacts to unlock green finance.
  - Strengthen the Africa Mining Vision (launched in 2009) as a key framework.

### Domestic reforms and institutional capacity
- 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:
  - Strengthen domestic financial markets and improve access to finance.
  - Leverage fintech innovations to support firms in the mining sector that face difficulties securing traditional financing.
  - Ensure accountable and transparent institutions, appropriate tax regimes, and sound public financial management to manage resource windfalls responsibly.

### Policy recommendations (concise)
- 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.

*IMF, "Harnessing Sub-Saharan Africa’s Critical Mineral Wealth", April 29, 2024.*

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## Content in this bundle

- **Digging for Opportunity: Harnessing Sub-Saharan Africa’s Wealth in Critical Minerals**
  - [Digging for Opportunity: Harnessing Sub-Saharan Africa’s Wealth in Critical Minerals (Markdown version)](/-/media/files/publications/reo/afr/2024/april/english/mineralsnote.pdf.md){rel="alternate" type="text/markdown"}
  - [Digging for Opportunity: Harnessing Sub-Saharan Africa’s Wealth in Critical Minerals (PDF)](/-/media/files/publications/reo/afr/2024/april/english/mineralsnote.pdf){rel="external" type="application/pdf"}

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## References

- [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)

_Source: https://www.imf.org/en/news/articles/2024/04/29/cf-harnessing-sub-saharan-africas-critical-mineral-wealth_