Africa's $29.5 trillion mineral wealth: Unlocking economic potential

Africa's youthful population and the global energy transition will mean massive demand for Africa's minerals in future, but the dysfunctional economy of the industry on the continent will need to change.

This was according to speakers at the Mining Indaba conference that started in Cape Town on Monday, and with over 10 500 delegates and speakers attending, it was the biggest event of its kind - the Mining Indaba has been held in Cape Town for over 30 years.

African Finance Corporation (AFC) President and CEO Samaila Zubairu said Africa's mining economy hosts some $29.5 trillion in on-site mineral value, representing 20% of the world's global mineral wealth, yet the continent captures only a fraction of the economic value of these resources.

He said an AFC study showed the continent to be under-explored - of the $29.5trn in value, $8.6trn remains undeveloped - and there is fragmented geological data and limited transparency on the continent, which had the effect of elevating risk perceptions and constraining investment.

He said the AFC's study, named The Compendium of Africa's Strategic Minerals, argued that improving geological data availability and quality is a necessary first step to de-risk projects and unlock exploration capital.

"We have a population of 1.3 billion, mostly young people, we want to be able to create jobs, but we export our minerals and import inflation," he said.  Africa has the lowest steel and energy consumptions per capita on the globe, and in the future, the biggest demand for minerals would be from the continent itself, he said.

South Africa's Mining Resources and Energy Minister Gwede Mantashe said: "The reality before us is clear: Africa holds an unparalleled share of the world's natural resources that are essential for industrialization, digitalization, and global economic growth, yet our continent remains largely poor. Instead of addressing this paradox, we too often engage in what can only be described as a race to the bottom. This must come to an end."

He said this year's Mining Indaba was particularly significant, coming just a few months after the first G20 Summit held on African soil. This summit had sent a message that Africa was no longer on the margins of global economic decision-making, but it was central to the future of global growth and industrial transformation.

"This gathering not only brought world leaders to Africa to address pressing global challenges, but, most importantly, it advanced discussions on promoting solidarity, equality and sustainability as key pillars of inclusive global growth. Central to this agenda is the recognition that global partnership for sustainable development and solidarity," he said.

He said partnerships were now needed on the continent to unlock value, manage risks, and deliver sustainable returns while advancing development.

"The G20 declaration – and the G20 Critical Minerals Framework – provide a clear pathway. It seeks to unlock investment in mineral exploration, promote local beneficiation at source, and strengthen governance for sustainable mining practices.

He said the discussions at the Indaba should focus on how collaboration could be encouraged between the public and private sectors, financial institutions, investors, and communities to unlock the full potential of the critical minerals on the continent for the benefit of its people.

"Mobilising capital at the scale required for exploration, responsible mining, and value-addition closer to the point of production cannot be achieved by governments alone. Nor can it be achieved by the private sector operating in isolation. It requires partnership," said Gwede.

Zubaira said the steel chain provided an example of the dysfunction of the steel industry for Africa. Africa hosts world class mining of ferro alloys and manganese, chromium and nickel and orion ore. Yet these supply chains were commercially tethered to Asia steel cycles, rather than Africa's development trajectory.

This exposure was economically costly. Right now, the slowdown in Asian steel demand, linked to China's property downturn and weaker construction, had transmitted shocks into African mineral markets.

In the Democratic Republic of Congo for instance, production quotas had been imposed on cobalt to manage oversupply and collapsing prices. In South Africa, primary steelmaking capacity had shut down due to weak domestic demand, high costs and fragmented offtake.

In Gabon, major manganese operations had periodically suspended production in response to softer demand from Asia. Yet, the 820km Lobito rail corridor was still importing large quantities of flat steel from Asia.

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