According to James Cust, a senior economist at the World Bank, the demand for critical minerals and battery metals presents a significant opportunity for African countries to reshape the global economic trajectory. However, realizing this potential will require overcoming various challenges.
Cust, who works for the World Bank’s Africa chief economist office covering sub-Saharan Africa, specializes in the economics of natural resources, wealth, and sustainability.
Recently, the organization published Africa’s Pulse, a biannual update on economic trends in the region, which focused on how African countries can leverage their resource wealth, including critical minerals, during the low carbon transition.
While Africa boasts an abundance of critical minerals, Cust emphasizes that being mineral-rich does not automatically translate into economic success.
He dispels the notion that lithium, for example, is the new oil, highlighting the global abundance of these minerals and ongoing discoveries worldwide.
To take advantage of Africa’s critical metals wealth, governments must implement effective policies and prepare their countries to capitalize on the opportunities presented.
To compete in the global marketplace against countries with abundant resources such as cobalt or lithium, African nations need to address tariff and non-tariff barriers to regional trade.
Currently, a significant portion of Africa’s trade occurs outside the continent due to fragmented markets. By fostering integration and cooperation, pooling resources, capital, skills, and trade opportunities across multiple countries can add value to minerals in Africa.
The African Continental Free Trade Agreement (AfCFTA) serves as a starting point, facilitating harmonization and removing tariff barriers to critical minerals within the continent.
The recent memorandum of understanding signed between the Democratic Republic of Congo (DRC) and Zambia exemplifies the potential of such agreements.
Moreover, the establishment of free trade opportunities can enable skills transfer at a continental level. With mining becoming increasingly capital intensive and reliant on automation and robotics, traditional mining techniques are evolving, necessitating different skill sets. By fostering skills development with transferability to other sectors of the African economy, job opportunities can extend beyond mining sites. Transferring skills across national borders becomes feasible when challenges related to skill mobility are addressed.
Africa can also leverage its critical minerals wealth by investing the proceeds in a diversified local economy.
This entails investing in infrastructure, human capital, education, healthcare, and workforce skills to build a modern economy that outlasts the depletion of natural resources.
By investing in the underlying infrastructure of the country while generating revenue from resources, Africa can create a sustainable economic foundation.
Exploration plays a crucial role in uncovering Africa’s untapped potential within the global critical metals supply chain.
Governments have a key role to play in promoting exploration by improving geological surveys and providing incentives for private investment through favorable legal structures.
Infrastructure development is another priority, not only for the mining sector but also for overall socio-economic development.
Africa’s critical minerals wealth represents a significant opportunity for the continent to shape the global economic trajectory.
By addressing challenges, implementing supportive policies, fostering regional integration, and investing in infrastructure and human capital, African countries can harness the potential of critical minerals in the low carbon transition, paving the way for sustainable economic growth and development.
