Sub-Saharan Africa holds the largest share of essential minerals needed for the production of various products that are driving technological advancements worldwide. This represents a source of wealth creation that could transform the region.
Sub-Saharan Africa possesses around 30% of the world’s essential mineral reserves. These natural elements are highly sought after for the production of goods necessary for the energy transition, ranging from electric cars to solar panels and other components. According to the International Energy Agency, between 2022 and 2050, the demand for nickel is expected to double, cobalt will triple, and lithium demand will increase tenfold.
The demand for products derived from these essential minerals will significantly rise on the global market. Global revenues from the extraction of just four key minerals (copper, nickel, cobalt, and lithium) over the next 25 years are estimated at $16 trillion in 2023. Sub-Saharan Africa has excellent chances of capturing more than 10% of this revenue, potentially increasing its GDP by 12% by 2050. The region could do even better by processing these minerals locally, propelling itself onto the global market and securing a minimum 12% GDP increase by 2050, according to consistent estimates.
For example, raw bauxite sells for $65 per ton, but once transformed into aluminum, it sells for $2,335 per ton, based on prices at the end of 2023. Developing local processing sectors could significantly increase the added value generated, create jobs, and boost tax revenues, thereby supporting sustainable development and poverty reduction.
Vital Reforms
To successfully create this value chain, the countries involved must implement structural reforms to support national mining companies and related processing sectors. These nations also need to foster a more favorable business climate by strengthening domestic financial markets and improving access to financing.
To responsibly manage the wealth generated by intelligently exploiting resources, the establishment of transparent institutions is necessary. Accountability must become a standard practice, with an appropriate tax regime and sound public financial management.