The global energy transition, underpinned by a voracious demand for critical minerals, presents Africa with a generational opportunity. Yet, for the G20’s ambitious declarations on harnessing critical minerals wealth to translate into tangible industrialisation, a fundamental shift in policy and capital deployment is required, particularly in nations like SA.
The continent must move decisively from being a primary source of raw materials to a sophisticated player in the midstream and downstream value chain.
Africa holds an estimated 30% of the world’s reserves essential for low-carbon technologies, including commanding positions in cobalt, manganese, and platinum group metals (PGMs).
The demographic tailwinds, with a projected expansion of the global middle class by 2040, guarantee sustained demand for the energy and technology infrastructure these minerals enable.
For SA, the challenge is one of strategic execution. The country possesses the industrial heritage, with established processing capabilities in steel and precious metals, and the mineral base (manganese, PGMs, chrome, vanadium) to become a regional processing hub.
The domestic electric vehicle market, though nascent, offers a crucial anchor for future battery storage and manufacturing output. However, the path to local value addition is obstructed by three interconnected policy and financial bottlenecks.
The most immediate hurdle is the profound disconnect between geological potential and investment reality.
Africa attracts only about 10% of global exploration capital. This capital paradox is driven by a combination of perceived political risk, regulatory uncertainty, and a lack of project bankability.
Mining is a finite resource, necessitating continuous exploration investment. The G20’s affirmation that solutions must include financing and investment de-risking is critical.
Governments must implement stable, transparent, and predictable policy frameworks to lower the cost of capital and attract the patient, long-term foreign direct investment required for large-scale refining and smelting operations.
Closing this 90% gap in exploration investment is the first step toward securing the future supply chain.
Industrialisation cannot occur without the necessary physical infrastructure. The G20’s recognition of this need must be matched by concrete, cross-border investment strategies. Regional infrastructure corridors, exemplified by the Lobito Corridor linking the DRC and Zambia to the Angolan coast, are vital models for optimising logistics.
The development of shared infrastructure, centralised processing facilities, rail networks, and port capacity is essential to reduce operating costs and improve global competitiveness.
SA’s own experience with projects like the $1.3bn (R17bn) Lebalelo Water Project, which relies on mining offtakers to anchor financing, underscores the complexity and long timelines involved.
This necessitates stronger project preparation, standardised regulatory alignment across borders, and innovative financing mechanisms that blend public and private capital.
The transition to a high-value minerals economy requires a fundamental upgrade in human capital. The sector demands a workforce proficient in Stem, data analytics, automation, and advanced processing techniques.
Yet, the region faces a significant talent gap, with only an estimated 20% of higher education graduates in Stem fields.
Addressing this is a policy imperative. Targeted investment in technical and vocational education, coupled with corporate-led skills transfer programmes, is necessary to ensure that local populations can staff and manage the sophisticated downstream industries.
Without this skilled base, the industrialisation dividend will be captured by foreign expertise, undermining the core goal of local value creation.
Finally, the G20’s focus provides a geopolitical tailwind for Africa to build a robust beneficiation base.
The emphasis must now shift from high-level dialogue to operational collaboration, leveraging regional initiatives, such as integrated energy networks between Angola, Zambia, and the DRC, to create a cohesive economic bloc.
SA, with its established financial markets and industrial base, is uniquely positioned to lead this charge. The window of opportunity is open, but it requires immediate, decisive action on policy reform and capital mobilisation to secure Africa’s role as a strategic, industrial partner in the global transition.
- Mabasa is a developmental economist and co-chairperson of the Brics Youth Council
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