DIVERSIFYING CRITICAL MINERALS FOR AFRICA’S ENERGY TRANSITION
INTRODUCTION
Critical materials are currently gaining center stage in many international discussions and diplomatic efforts. Due to the geographic concentration of their production and processing, there are issues with resource security and geopolitical dynamics.[i] The implementation, cost, and sustainability of energy transition technologies may be impacted by such concentration, which generates vulnerabilities and uncertainties for both producing and consuming nations.[ii] Various economic, political, and social priorities are now being reflected in strategies to diversify the supply and manufacturing chains for these minerals.[iii]
CRITICAL MINERALS AND THE ENERGY TRANSITION ACROSS AFRICA
A critical mineral is a metallic or non-metallic material with a supply chain that is vulnerable to interruptions and is crucial for contemporary economies, national security, or technologies.[iv] Based on the relative importance of various minerals to their industrial demands and a strategic evaluation of supply threats, individual countries create their respective list(s) of important minerals.[v] Additionally, evaluations of mineral criticality are dynamic and depend on the current economic and political environment.[vi] Advanced technologies, such as mobile phones, computers, fiber-optic cables, semi-conductors, currencies, and applications in the fields of defense, aerospace, and medicine, all depend on critical minerals.[vii] Many are found in low-emission technologies such as rechargeable batteries, solar panels, wind turbines, and electric cars. Some are also essential for everyday goods like electronics and stainless steel.[viii]
A total of 50 critical minerals have been assembled till date, the most common include copper, lithium, nickel, cobalt, and rare earth elements. These form crucial parts of many of the rapidly expanding renewable energy technologies deployed today, from electric vehicles to electricity networks and wind turbines.[ix] With the acceleration of the transition to sustainable energy, demand for these minerals will rise quickly.[x] Compared to their fossil fuel-based equivalents, solar photovoltaic plants, wind farms, and electric cars typically require more key minerals for construction.[xi] A typical electric car requires six times as much mineral input as a conventional automobile, and an offshore wind farm requires thirteen times as much mineral input as a facility that burns gas of a similar size.[xii]
Based on technology, several types of mineral resources are employed. When it comes to battery performance, lithium, nickel, cobalt, manganese, and graphite are essential.[xiii] Permanent magnets, which are utilized in EV motors and wind turbines, also require rare earth elements.[xiv] Copper is a key component of all electricity-related technology, hence copper and aluminum are essential for power networks.[xv]
National energy policy makers will need to broaden their horizons and take new vulnerabilities into account, given the growing significance of essential minerals in a decarbonized energy system.[xvi] Critical minerals must be supplied in greater quantities due to the energy transition, yet their supply networks are still exposed to a variety of geopolitical hazards.[xvii]
The World Economic Forum estimates that 30% of the world's mineral reserves are located on the African continent, and that by 2030, demand for rare earth metals alone will amount to 315000 tons.[xviii] The mining and processing of key minerals is regionally centralized, with a few countries and a small number of corporations playing the leading roles.
Australia (lithium), Chile (copper and lithium), China (graphite, rare earths), the Democratic Republic of the Congo (cobalt), Indonesia (nickel), and South Africa (platinum, iridium) hold the leading positions in the mining of key minerals.[xix] With China presently controlling 100% of the refined supply of natural graphite, dysprosium (a rare earth element), 70% of cobalt, and roughly 60% of lithium and manganese, this concentration becomes even more obvious.[xx]
Therefore, there is a potential for supply shortages to become more likely as a result of external shocks, resource nationalism, export restrictions, mineral cartels, instability, and market manipulation.[xxi]
Energy transition minerals possess abundant reserves, but there are few mining and refinery facilities across the world. Short- to medium-term supply disruptions could slow down the pace of the energy transition.[xxii]
The IRENA Report on Geopolitics of Energy Transition: Critical Minerals identifies chances to change the narrative for extractive communities and foster the development of inclusive, ethical, and sustainable value chains.[xxiii] Widespread material reserves present potential for diversifying mining and processing, particularly to countries that are developing. Supportive legislation will enable developing nations to seize new chances and may enhance resilience, while advancing the global decarbonization agenda.[xxiv]
The risk of a supply chain breakdown should be avoided, considering that it is more likely to slow down the transition than it is to compromise energy security. To reduce the geopolitical risks of concentrated supply chains, the objective should be to improve collaboration regarding critical minerals in Africa.
DIVERSIFYING THE CRITICAL MINERALS SUPPLY CHAIN ACROSS AFRICA FOR A SMOOTH ENERGY TRANSITION
Currently, developing nations, particularly in Africa, account for a large portion of housing the materials required for the energy transition on a global scale. Their share of the available reserves is even higher, but it has not been completely analyzed. Bolivia, for instance, has more lithium deposits than any other nation at 21 million tonnes, but in 2021 it generated less than 1% of the global supply. These countries can use their mineral resources to attract industries that are involved in the middle (processing) or the end (producing batteries and electric vehicles) of the value chain, thereby diversifying the supply chain. However, the following should be taken into consideration, within the goal to diversify the supply of critical minerals[xxv]:
COLLABORATIVE STRATEGIES: No nation can meet its need for all essential minerals by itself, thus cooperative strategies that are advantageous to all parties concerned must be designed and put into place.
Concentrated supply chains are anticipated to continue in the near future, given the lengthy lead periods for constructing new mines and processing facilities. In order to keep markets operating, countries should endeavor to build dual strategies that ensure cooperation but also long-term supply chain diversification. Supply chain issues are the focus of several bilateral, regional, and industry-led initiatives, which could be used to guide coordinated policy action. To ensure that minerals and materials continue to grow at an accelerated rate, IRENA's Collaborative Framework for Critical Materials is a recognized forum for information exchange, best practices, and coordination of efforts, in which a similar platform can be created across Africa.
INVESTMENT IN RESEARCH AND DEVELOPMENT (R&D): By increasing research and development, spending alongside geopolitical risks can be reduced. This will hasten the discovery of alternate solutions, increase productivity, and also increase recycling and repurposing choices. With a focus on this decade, several techniques can be used to avoid significant supply issues. Among these, recycling and reusing items to recover rare resources are crucial. Product design solutions that minimize the usage of essential materials are also important. Promising recent trends include battery producers reducing their dependency on essential material suppliers. To achieve long-term material security, policymakers should encourage innovations that reduce demand and promote a circular economy.
TRADE AND COOPERATION: Supply chain diversification must incorporate a plan for trade and collaboration between developed and developing nations. The importing powers must encourage industrial growth in developing nations beyond extractive patterns in vital material supply chains, in order to engage in foreign policy in a balanced and cooperative manner. This means creating collaborations, particularly those with the private sector, promoting ethical sourcing procedures, aiding in the capacity building of producing nations, fostering accountability and transparency, and funding sustainable projects.
STANDARDS: The energy-driven mineral boom presents an opportunity to rewrite the extractive industry's history. All governments and businesses must take aggressive measures to address difficulties with mining operations. Countries that import and export must work together to create supply chains that adhere to unambiguous norms for community involvement, environmental protection, and human rights. The lack of these standards, which are crucial for human security and being one of the main reasons for geopolitical instability, is a major problem. In this regard, mining companies should be held liable for the ethical supervision of their respective extraction procedures.
DATA TRANSPARENCY: To track current supply and improve market transparency, the first step should be the gathering of more thorough data and information on reserves, output, investment, and pricing, etc..
Market development may be aided by the implementation of international quality standards and certification(s) for important products using vital materials. The creation and ongoing updating of demand scenarios should go hand in hand with efforts to increase insights into potential gaps, alongside the effects of innovation. To prevent unforeseen effects on climate action, any short-term policy decisions, such as stockpiling, should be carefully evaluated.
CONCLUSION
The demand for a number of critical minerals will mostly be driven by the energy transition. Minerals and metal use will be significant during the transition. Currently, the majority of the demand for these materials is for purposes unrelated to the energy transition; but, as the transition advances, it is anticipated that demand for several materials will increase. Countries must consequently take into account key factors to diversify the minerals supply chain, in order to accelerate the energy transition, given the highlighted geopolitical risks of concentrated supply chains across Africa and beyond.
[i] IEA, The Role of Critical Minerals in Clean Energy Transitions < https://www.iea.org/topics/critical-minerals > accessed 14 July 2023.
[ii] Ibid
[iii] Ibid
[iv] Critical Minerals at GeoScience Australia (5 July 2023) < https://www.ga.gov.au/scientific-topics/minerals/critical-minerals > accessed 14 July 2023.
[v] Ibid
[vi] Ibid
[vii] Ibid
[viii] Ibid
[ix] IEA, The Role of Critical Minerals in Clean Energy Transitions < https://www.iea.org/topics/critical-minerals > accessed 14 July 2023.
[x] Ibid
[xi] Ibid
[xii] Ibid
[xiii] Ibid
[xiv] Ibid
[xv] Ibid
[xvi] Ibid
[xvii] Nasi Hako, Diversifying Africa’s Mineral Supply Chains for a smooth energy transition (ESI Africa July 13 2023) < https://www.esi-africa.com/africa/diversifying-africas-mineral-supply-chains-for-a-smooth-energy-transition/ > accessed 14 July 2023
[xviii] Ibid
[xix] IRENA, Geopolitics of the Energy Transitions: Critical Minerals < https://www.irena.org/Publications/2023/Jul/Geopolitics-of-the-Energy-Transition-Critical-Materials > accessed 14 July 2023
[xx] Ibid
[xxi] Nasi Hako, Diversifying Africa’s Mineral Supply Chains for a smooth energy transition (ESI Africa July 13 2023) < https://www.esi-africa.com/africa/diversifying-africas-mineral-supply-chains-for-a-smooth-energy-transition/ > accessed 14 July 2023
[xxii] Ibid
[xxiii] Ibid
[xxiv] Ibid
[xxv] IRENA, Geopolitics of the Energy Transitions: Critical Minerals < https://www.irena.org/Publications/2023/Jul/Geopolitics-of-the-Energy-Transition-Critical-Materials > accessed 14 July 2023