The extractive and energy industries are among the world’s most polluting sectors, emitting more than half of the world’s greenhouse gas emissions. A sad score that puts them in the dock, or worse, the main culprits in the triple climate crisis. In response, the Sustainable Development Goals set by the UN and the Paris Agreement at COP21 put the emphasis on switching from fossil fuels to renewable energies. This shift will begin with an energy mix. This strategic shift towards more environmentally-friendly renewable energies represents an opportunity for Africa’s development. The continent has the strategic minerals and green energy sources that are essential to this ecological transition.
Electric car industry
One of the tip of the iceberg in this ecological transition remains the switch from conventional thermal vehicles to electric vehicles. According to the United Nations Conference on Trade and Development’s (UNCTAD) African Economic Development Report, “it takes nearly six more minerals to build an electric car than a conventional car ”.
This is an advantage for the African continent, which has around 19% of the world’s reserves of the metals needed to build an electric car. These include 48% of the world’s cobalt and manganese reserves, 80% of the world’s phosphate reserves and 92% of the world’s platinum reserves. In addition, Africa accounts for 97% of the world’s cobalt exports and 84% of the world’s manganese exports. A wealth of resources that positions Africa as a leading business partner in the booming electric vehicle industry.
Solar & green hydrogen
Solar energy also has a special place in the sunshine of renewable energies. Its raw material, the sun, is omnipresent on the continent, with approximately 3,000 hours of sunshine a year. According to the International Energy Agency, 60% of the ideal locations for developing solar energy are in Africa. So the production of electricity from this source is finding fertile ground in Africa. The European Investment Bank’s 2022 report reveals that 50 million tonnes of green hydrogen could be produced on the continent by 2035 thanks to solar energy. In addition to its low environmental footprint, green hydrogen has a competitive production cost of less than $2 per kilogram (compared with $60 per barrel of oil). An attractive option for investors with a view to decarbonising supply chains, with considerable cost advantages. Overall, statistics show that the continent has at least one-fifth of the world’s reserves of the ten or so minerals needed for the energy transition.
The electronics industry: the case of mobile telephony
In addition to their importance in the production of renewable energies and greener electric mobility vehicles, Africa’s minerals also fuel industries of the future, such as mobile telephony. Cobalt, nickel and manganese are essential raw materials for the manufacture of telephones. Clearly, Africa will once again lose out from the current economic model, which consists of marketing raw materials. Such an approach will offer the continent only a tiny sliver of the socio-economic weight and added value that these minerals acquire as a major component in the supply chain of these industries. A structural transformation of the economy is therefore needed to make renewable energies the real engine of growth. This is a challenge that the continent will have to meet with a new approach.
According to a Tralac report, despite all its potential, Africa attracted just 2.8% of the foreign direct investment (FDI) allocated worldwide to the processing of critical minerals over the period 2019-2023. In order to reverse this trend, the first step advocated is a political choice: ban exports in order to increase the competitiveness of domestic processing.
An opportunity
The prerequisite for both is the creation of a framework for B2G and B2B dialogue between existing companies and potential investors. The International Exhibition of Extractive and Energy Resources (SIREXE), scheduled to take place from 27 November to 2 December 2024 at the Parc des Expositions in Abidjan, Côte d’Ivoire, offers just such an opportunity. The programme for this first event, which will focus on the 3 sub-sectors of the industry – mining, oil and energy – will include opportunities offered by Côte d’Ivoire and other countries in the West African sub-region. Panels and conferences on the theme of sustainable development of the extractive and energy industries: policies and strategies will help to address the sector’s environmental and socio-economic challenges. The event comes at just the right time, given the cascade of recent discoveries of strategic minerals for the ecological transition in general and renewable energies in particular. The aim is to pull out all the stops to industrialise the sector and attract foreign direct investment.
Land of the future
Furthermore, with regard to the strategic challenge of becoming a key continent for attracting investment in the renewable energy sector, the continent has a number of advantages. << Africa, as a low-carbon emitter capable of easily adapting to the production of energy transition sectors, is the ideal setting for economies and companies seeking to decarbonise their sectors of activity, diversify their supply chains and make them greener>>, the report points out. The continent therefore looks like a dream destination for foreign direct investment. What’s more, because of its youth, the continent’s appeal to businessmen in the renewable energy sector is strengthened.
“Its younger workforce, more open to new technologies and more able to adapt, will enable technology-intensive sectors and supply chains to increase their productivity”, according to UNCTAD, represents an X factor for the extractive and energy industries in search of productive human resources. A business climate that is attractive on the face of it could represent real added value for the continent if it succeeds in attracting investment. From the outset, the establishment of foreign companies would boost the production of wealth and increase GDP.
In addition, the establishment of industries processing extractive and energy resources would create jobs with above-average pay in line with sector standards. This increase in income will lead to a virtuous circle of wealth creation and higher living standards. This scenario will also increase the expertise of local players benefiting from their experience in these multinationals. These skills could potentially form the basis for the development of local initiatives in the sector. The setting up of joint ventures between local companies and multinationals in the sector also remains an outline solution within the framework of a win-win partnership between companies from the North and South. All the indicators therefore seem to be in the green to make SIREXE the link between the continent’s resources and the objective of sustainable development of renewable energies.
