Africa holds a quarter of the world’s critical minerals powering AI and clean energy, but less than 10% of mining projects are moving ahead

The global race to secure the minerals powering artificial intelligence, clean energy and advanced defence technologies is accelerating. Africa should be one of its biggest winners

Conveyor belts feed broken rock into two different stockpiles (oxides and sulphides) at an open-pit copper mine in Zambia, Africa. [Stock Photo via Getty Images]

• Africa holds over a quarter of the world’s critical mineral reserves.
• Yet fewer than 10% of projects are moving towards production.
• McKinsey says the continent could unlock $40bn in mining value.
• AI and the energy transition are raising the stakes. 

ADVERTISEMENT

The continent holds more than a quarter of the world’s known critical mineral reserves, including some of the richest deposits of copper, manganese, bauxite and lithium

Yet fewer than one in every 10 critical mineral projects has secured financing or advanced beyond the feasibility stage, according to a new McKinsey report

The report warns that unless African countries fix long-standing infrastructure, financing and policy challenges, the continent risks missing one of the biggest mining investment opportunities in decades despite holding many of the minerals the world increasingly depends on

ADVERTISEMENT

Demand for energy-transition minerals is projected to grow by an average of 4.5% annually through 2035 as governments and companies invest heavily in artificial intelligence infrastructure, electric vehicles, renewable energy and advanced manufacturing

At the same time, geopolitical tensions and supply chain concerns are forcing countries to diversify where theyl competition

Africa’s biggest advantage is becoming its biggest frustration

According to McKinsey, the continent holds more than 60% of global reserves of platinum group metals, cobalt, chromium and tantalum. It also accounts for 37% of manganese reserves, 25% of graphite reserves and about 10% of global copper reserves

Despite that advantage, Africa continues to lag behind mining powerhouses such as Australia and Canada in turning discoveries into producing mines

ADVERTISEMENT

DON’T MISS THIS:Congo set to take advantage of critical mineral boom with its first-ever stock exchange

The consultancy estimates that Africa receives only about $1.2 billion in exploration spending annually, roughly half the level attracted by either Australia or Canada, even though Africa is larger than China, Europe and the United States combined

Instead of flowing into a broad pipeline of mining projects, investment is concentrated in a handful of large assets capable of absorbing political and operational risks, leaving many commercially attractive deposits undeveloped

NIGER-ENERGY-NUCLEAR-MINE-AREVAA view taken 23 February 2005 of installations of drills at Cominak underground uranium mine in Arlit in the Air desert, one of the world’s most impoverished regions. At the Arlit uranium mine, exploited by Areva of France, the world’s largest nuclear engineering group, deep in the Sahara desert in Niger, the uranium ore is so close to the surface that workers go just sixty meters down to the bottom of the open pit mine to retrieve it. The Areva Mining Business Unit specializes in exploration, mining and processing of uranium ore, a strategically important raw material for nuclear fuel. Areva is the world’s second largest natural uranium producer. Some 7,000 tons of uranium, about 20% of world production, are extracted each year from mines operated by the group and located mainly in Canada and Niger. AFP PHOTO PIERRE VERDY (Photo by PIERRE VERDY / AFP)PIERRE VERDY / AFP

ADVERTISEMENT

McKinsey argues that geology is no longer the main obstacle. The bigger challenge is everything surrounding the mine

Many projects continue to face ageing rail networks, limited port capacity, unreliable electricity, permitting delays, regulatory uncertainty, community disputes and high financing costs

Those constraints increase development costs and delay production, making projects less attractive to investors

The report cites Guinea’s Simandou iron ore project, South Africa’s Kalagadi manganese mine and Tanzania’s Mahenge and Nachu graphite projects as examples of developments that faced lengthy delays because of financing, regulatory or infrastructure challenges

McKinsey says African mines are often more expensive to operate than similar mines elsewhere despite having high-grade ore, largely because of infrastructure inefficiencies and weaker operational performance

ADVERTISEMENT
Technician control dumper in open-pit phosphate mine. [Stock Photo/Getty Images]Technician control dumper in open-pit phosphate mine. [Stock Photo/Getty Images]BI Africa

A $40 billion opportunity still within reach

Despite the challenges, McKinsey believes Africa can still emerge as a global leader in critical minerals

The consultancy estimates that improving infrastructure, accelerating mine development, adopting advanced technologies and developing regional mining clusters could unlock as much as $40 billion in additional value across Africa’s mining ecosystem

DON’T MISS THIS:Nigeria unveils world-class mineral discovery as new 3.3 million-tonne lithium reserve comes to light

ADVERTISEMENT

Those reforms could increase Africa’s GDP by about 4% and create more than three million jobs by 2035

One of the report’s biggest recommendations is the development of mining clusters, where neighbouring operations share railways, ports, power infrastructure, processing plants and other facilities instead of building them independently

McKinsey estimates that four critical mineral clusters in Southern Africa alone could generate between $15 billion and $20 billion in additional revenue and create about 1.85 million jobs, while iron ore and bauxite clusters across Guinea, Liberia and Sierra Leone could generate another $17 billion and support approximately 1.3 million jobs

diamond mining congoBI Africa

AI could transform African mining

ADVERTISEMENT

The report also argues that artificial intelligence could help solve many of the industry’s long-standing productivity problems

Applying AI to geological exploration could improve drilling success rates, while smart mining systems, automated equipment and predictive maintenance could lower operating costs and improve equipment performance

DON’T MISS THIS:Africa’s ultra-rich are growing faster than in the U.S., China and Europe despite holding less than 1% of global wealth

McKinsey estimates that widespread adoption of generative AI could add between $5.3 billion and $8.5 billion in economic value to Africa’s mining industry

The consultancy points to companies already using AI to identify new mineral deposits and says technology will become increasingly important as miners seek to shorten project timelines and improve returns

ADVERTISEMENT
Africa’s largest diamond producer courts UAE, Oman to acquire 138-year-old diamond-mining companyBI Africa

The next mining winners won’t simply own the minerals

McKinsey argues that the next phase of the global critical minerals race will not be won by countries with the richest deposits alone

Instead, it will favour those able to build competitive mining ecosystems through reliable infrastructure, faster project execution, supportive policies and greater use of technology

For Africa, that means its geological advantage alone will not guarantee success

ADVERTISEMENT

The continent has the re share of the economic value generated by those reng companies can turn mineral wealth into operating mines