Report: Africa trailing in global mining exploration spending

Sub-Saharan Africa holds nearly 30 per cent of the world’s known reserves of critical minerals essential for the global energy transition, including cobalt, copper, lithium and platinum-group metals.

These minerals form the backbone of low-carbon technologies powering electric vehicles, renewable energy systems and energy storage solutions crucial to combating climate change.

Yet, despite its immense mineral wealth, the region struggles to attract adequate exploration financing.

According to a recent white paper report by the World Economic Forum (WEF), the region receives less than 10 per cent of global investment in this vital sector.

The economists reckon that this stark financing gap threatens to undermine the region's potential to become a key supplier in the race to secure minerals critical for a green future.

While countries in the region boast some of the highest reserves-to-production ratios globally, signalling capacity for sustained mineral output, this inadequate funding hampers their ability to develop full value chains and expand production to meet growing international demand.

The white paper, a collaborative effort between Wef’s Centre for Energy and Materials and the Development Bank of Southern Africa (DBSA), spotlighted this challenge through consultations and workshops held in the first six months of this year.

Stakeholders from the ten surveyed countries, including Angola, the Democratic Republic of Congo, Zambia and South Africa, identified eight key themes underlying the financing challenge.

These include policy uncertainty, investment risks, limited energy access, transportation obstacles, lagging innovation, slow industrialisation, skills shortages and fluctuating demand.

Additional mineral-rich countries surveyed were Botswana, Madagascar, Mozambique, Namibia, Tanzania, and Zimbabwe.

Additionally, the International Energy Agency (IEA) predicts that the supply-demand gap for critical minerals will quadruple by 2040, challenging global supply chains and the energy transition.

As a result, the economists are proposing proven and innovative solutions like designing de-risking finance structures, upgrading infrastructure networks, adopting advanced technologies and leveraging offtake agreements to ensure predictable revenues.

“Innovative financing tools, like de-risking structures, guarantees and blended finance, can help unlock funding for critical minerals,” the paper reads.

“However, it is equally vital for governments, mining companies, financiers and international partners to ensure these investments also support broader development and better living conditions.”

The forum also stresses the need for stakeholder engagement and community participation, terming them essential to ensure local populations benefit from investments.

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“Through human capital and local skilled workforce development, Southern African Region (SAR) countries can support citizens through employment, training, enterprise development and community ownership,” the paper adds.

Nevertheless, it points out that developing industrial clusters and promoting local beneficiation could help SAR countries move down the value chain, industrialise and grow their economies.

Wef explains that by localising critical minerals value chains through clean hydrogen and green tech manufacturing, the countries could boost economic growth, create quality jobs and support inclusive development.

“This could also position the region as a leader in clean energy technology, driving industrial decarbonisation and enhancing energy security.”