When the Rules Break: Closing Africa’s Mineral Value Gap

Africa’s position in the global minerals economy is often described in terms of abundance, but the more revealing story is the gap between what the continent owns and what it captures. 

Africa holds and supplies a large share of the inputs underpinning the energy transition, from manganese to cobalt and copper. Yet the continent captures only a fraction of the global value generated downstream. Africa accounts for less than 1% of the value generated in clean energy technology manufacturing, despite its dominant role in supplying the raw materials that support clean energy.

This gap has led to a rise of what market commentators refer to as resource nationalism, while proponents of African agency prefer the term resource sovereignty. Across the continent, governments are no longer content with exporting raw materials while value accrues elsewhere. At the same time, mining operators are pushing back against policies they see as commercially unworkable. Somewhere between these positions lies a more durable settlement, one that moves beyond the binary of extraction versus transformation and instead redefines what “value” actually means.

Redefining local value addition

The discussion around local value addition is often reduced to the impacts of export bans. Far from being a uniform mechanism, export bans have different motivations and effects. In the Democratic Republic of the Congo (DRC), periodic cobalt export suspensions have been used to stabilise prices in a highly volatile market. In Namibia and Malawi, export restrictions on unprocessed minerals have been introduced to steer investment toward domestic processing in lithium, rare earths, and other critical minerals. With the same objectives, Gabon has announced its intention to cease all exports of raw manganese by 2029.

Not all countries have the same leverage. Dominant producers like Gabon are more likely to absorb these interventions and secure the cooperation of mining operators. Malawi, in contrast, risks undermining its efforts to establish itself as an emerging mining jurisdiction. Zimbabwe, one of the most recent countries to impose an export ban, stands in between. Its rise among the leading lithium producers gives it an edge over mining operators it accused of playing with local processing and export rules. But without clear policies to create a conducive regulatory and infrastructure environment for local processing, it risks seeing the promise of the lithium boom fade as fast as it appeared.

The Indonesian experience is often mentioned by both sides of the debate. After banning the export of raw minerals in 2014, Indonesia increased the total export value of processed nickel from USD 3.1 billion in 2013 to USD 19.2 billion in 2023. The effects were less impressive for bauxite, as buyers of Indonesian bauxite could easily switch to alternative suppliers. The export value of all bauxite-containing ores, alumina, and aluminium ultimately decreased by almost half of their 2013 values. Coincidentally, it is Indonesia’s bauxite export ban that allowed Guinea to become the world’s leading bauxite exporter. And while it proactively pushes for local value addition, Guinea has, until now, refrained from imposing an export ban on bauxite, favouring export control mechanisms in hopes of mitigating falling market prices.

But value creation goes beyond domestic processing, with immediate gains coming from employment creation, fiscal capture, infrastructure spillovers, and local procurement. Especially for emerging mining jurisdictions, consolidating the regulatory framework to ensure that mining projects deliver benefits to impacted communities before the first ore is even exported. Value does not only derive from large-scale, foreign-owned projects. More deliberate governance and formalisation of artisanal and small-scale mining, combined with a structured local development framework, could generate employment and fiscal outcomes as transformative as local mineral processing.

At the same time, new industrial ambitions are emerging across the continent. The Democratic Republic of the Congo and Zambia have aspirations to produce battery precursors, the first step in the EV battery supply chain – measures that were supported by USAID under the Biden administration. Namibia is pursuing a distinct trajectory by linking its uranium reserves to a long-term ambition of developing domestic nuclear energy capacity, receiving pledges of support from China and Russia. If they do not want to see the perceived value of their partnerships decrease, Western countries will have to be more proactive in their support of local value addition ambitions.  

Overcoming industrialisation constraints

Industrialisation driven by the mining sector in Africa is not new. Several countries have long-standing industrial assets tied to mining and metals processing. However, many of them are now under structural pressure. In South Africa, instability in power supply, rising input costs and grid constraints have contributed to widespread restructuring across smelting and ferroalloy industries, with hundreds of thousands of jobs linked to energy-intensive manufacturing at risk.

In Mozambique, the Mozal aluminium smelter, historically accounting for up to 3% of national GDP and around 40% of exports, is now facing closure in 2026 after failing to secure a viable long-term electricity tariff agreement. In Cameroon, Alucam has similarly struggled with ageing infrastructure and repeated technical disruptions, with production volatility increasing over the past decade and output declining significantly compared to historical peaks.

Power is indeed one of the key constraints put forward by mining operators to set aside localisation demands. Aluminium smelting typically requires electricity costs below 4 cents per kWh to remain globally competitive, yet in many African jurisdictions, industrial tariffs remain significantly higher, often above 10 cents per kWh once transmission instability is factored in. This alone makes large-scale smelting or refining structurally unviable without subsidised or captive power arrangements.

Cost of capital is another constraint, acting as a structural tax on African industrialisation. Sovereign borrowing costs across Africa are, on average, 3 to 5 times higher than in OECD economies, with Eurobond spreads frequently exceeding 700–900 basis points during periods of market stress. For mining projects, this translates into project-level discount rates often above 15–20%, compared to 6–10% in lower-risk jurisdictions. As a consequence, projects that are economically viable in theory become unbankable in practice. It also limits state capacity to co-invest in enabling infrastructure such as rail corridors, ports, and power transmission networks, which are essential for downstream industrialisation.

Finally, a knowledge gap must be resolved, both in terms of human and technical capital. African governments must be able to dedicate the appropriate resources to train and retain local engineers and geologists, and to finance the development of national geological programs and laboratories. The mining industry has been an early adopter of AI to analyse geological datasets, which are increasingly becoming strategic assets in their own right. It is striking that tensions around the digitisation of geological data from the DRC did not emerge in Kinshasa, but in Brussels, between KoBold Metals and the Royal Museum for Central Africa, where colonial-era geological records are still conserved. Initiatives to reinforce Africa’s data sovereignty must thus be integrated into continental mining policies, both driving and benefiting from the local value addition.

Building a continental position on local value addition

Overcoming these constraints will require interventions at the national and sub-national levels, anchored in inclusive dialogue among governments, investors, local private-sector actors, development finance institutions, and civil society. Long-term industrial planning frameworks leveraging mineral revenues, such as the economic development program Simandou 2040 in Guinea or regional initiatives aimed at steering investment into areas like South Africa’s Northern Cape, illustrate the type of coordinated approach needed to align infrastructure development, energy provision and industrial policy with mining investment cycles.

At the continental level, this reinforces the need for a coherent implementation of the African Mining Vision. The African Minerals Development Centre (AMDC) is the primary institutional vehicle for this agenda and for supporting harmonised mineral governance across member states. Only three countries have ratified the AMDC framework, falling well short of the 15 threshold required for adoption. For the AMDC to function as a credible coordinating institution, it will require significantly broader participation, particularly from key existing and emerging mining jurisdictions.

The position of African countries on mineral value addition must also be voiced on the international stage. Instruments such as carbon border adjustment mechanisms (CBAMs) risk reshaping market access for mineral-rich developing economies, including for products such as steel and aluminium. A coordinated African position would be essential to ensure that the energy transition is economically just and development-compatible, notably by putting in place proper financing frameworks for green industrialisation.

Many of the minerals produced on the continent are critical inputs for defence, aerospace and advanced technologies, justifying a larger place for Africa in the governance of these sectors and global discussions. This includes resource governance debates, such as the management of seabed minerals, which are designated as the common heritage of mankind. African states, including landlocked countries, have a say in their management to both ensure equitable benefit-sharing from potential exploitation and safeguard against unintended consequences for land-based producers. For this voice to be effective, it must be consistently articulated in the institutions where global norms are negotiated. This includes strengthening Africa’s collective representation through the African Union and advancing long-standing efforts to secure an African permanent seat at the United Nations Security Council. 

Ultimately, closing Africa’s mineral value gap will depend on coordinated action across all levels.

Governments must build credible, integrated industrial frameworks that align mining with the realities of energy, infrastructure, and financing. Investors, in turn, will need to shift from purely extractive models toward co-investment in the enabling ecosystems, power, logistics, skills and local supply chains that make value addition commercially viable. At the continental level, African nations must translate ambition into alignment by projecting a unified African position in global trade, climate and resource governance forums. Only through this convergence can Africa move from being a supplier of raw materials and a ‘price taker’, to a shaper of the systems that define their value, and a ‘price maker.’