Mineral Alliances Promoted for Industrial Advancement in Africa

The European Commission is facing a potential loss of face as the proposed Lobito Corridor railway extension in Africa appears to be at risk of being replaced by a road network upgrade. This shift could further entrench the perception that Europe is primarily interested in mineral extraction from the continent, rather than fostering sustainable development.

China, with its dominance over the mineral supply chain, has demonstrated its readiness to use this leverage as a geopolitical tool. European firms, on the other hand, may struggle to compete with China's mineral processing prowess and infrastructure development capabilities in African countries.

To make local value addition economically viable and attractive for foreign investment, more on-the-ground reforms and investments are needed. Weak regional cooperation is a significant challenge in Africa, with many countries not sufficiently cooperating on mineral value addition, and lacking the infrastructure and trade logistics of regional economic corridors.

Several European countries, including Belgium, France, and Germany, have established mineral- and energy-security-related agreements with African countries. These agreements focus on the extraction and processing of critical minerals, often linked to broader strategic partnerships in green energy and raw material supply chains. The goal is to secure access to essential resources like cobalt, lithium, and rare earth elements vital for energy transition technologies.

African governments need to become more open to cooperating with one another on value addition, or else opportunities will continue to be lost to other continents. One way to start is by exploring how the benefits of regional processing facilities could be shared among participating countries.

European involvement in Africa's mining sector has diminished in recent years, with European companies struggling to compete with a growing crowd of other powers surging ahead in securing access to Africa's critical minerals. European governments need to work with their African counterparts to realise the latter's value addition ambitions, as they cannot afford to miss out on this chance to diversify their supply chains.

The African Union launched the African Green Minerals Strategy in December 2024, aiming to build key value chains by ensuring industrialisation through local beneficiation, green technology manufacturing, and mineral-based economic transformation. This strategy aligns with the broader efforts of several African countries, such as Namibia and Zambia, which are striving to develop their domestic economies through value addition.

However, challenges remain. Failure to reach economies of scale is a concern for the economic viability of value addition projects in African countries. Recognising the need to partner with mineral-rich African countries, the EU has signed mineral and energy strategic partnerships with several African countries, including Namibia and Zambia.

Both governments have adopted export restrictions on unprocessed minerals to encourage more local value addition, but these efforts have had limited success. African stakeholders feel that European investors' perceived risks of investing in Africa are disproportionately high compared to what investors from other countries see.

Local civil society representatives in Namibia and Zambia conveyed reservations about projects that seek to produce energy and mineral products solely for export markets, indicating that this would merely be an extension of the extractivism that has long blighted African countries. European policymakers will need to invest more and partner effectively with their African counterparts for European industries to have the minerals they need from reliable and diversified sources.

In Namibia, most minerals, including lithium and rare earth elements, are not currently produced in large enough volumes to make downstream processing facilities economically viable. European firms may offer potential as technology and equipment providers for mining and some value addition operations, but there is often a mismatch between the price of European technology and what local companies are willing and able to pay.

Skill scarcity in the workforce is a challenge in African countries like Namibia due to a significant shortage of trained technicians and artisans, especially at higher vocational levels. This puts pressure on the labor market and could lead to widespread delays if multiple large-scale projects are developed simultaneously.

Despite these challenges, creating more value addition in countries like Namibia and Zambia is not an impossible task. European firms are well positioned to help these countries tackle some of the obstacles to unlocking local value addition, including a lack of affordable and reliable utilities, scarcity and high price of mineral inputs in local markets, and a lack of economies of scale.

In conclusion, the pursuit of value addition and sustainable development in Africa requires concerted efforts from all stakeholders. European firms, African governments, and the African Union all have crucial roles to play in overcoming the challenges and realising the potential benefits of this partnership.