5 Trends Shaping Africa’s Mining Industry in 2024
Africa’s mining outlook stands at a crossroads. On one hand, the continent is witnessing a monumental surge in opportunity and demand for its abundant minerals and metals. On the other, however, global insecurity and oscillating commodity prices are steering investments away from perceived "riskier" choices, with Africa potentially missing the opportunity to capitalise on its mineral endowments. Against this backdrop, this Insights explores 5 key trends shaping Africa’s mining industry in 2024.
READ: S-RM Analysis – Understanding Africa's Critical Mineral Risk Landscape
1. Battery Minerals: Powering the Global Energy Transition: The global push toward electrification and renewable energy propels the demand for battery minerals, positioning Africa as a key player with abundant resources. Projections indicate a tripling of demand by 2040, and a sixfold increase by 2050, making Africa a powerhouse with significant contributions to the global supply. Afterall, the continent is home to over 70% of the world's cobalt, 60% of manganese, 25% of bauxite, nearly 15% of copper, amongst other minerals deemed “critical” by governments the world over. However, the continent is at a crucial juncture. While its natural resources offer an extraordinary opportunity, concerns persist about the risk of value extraction, and insufficient investment hampers the much-needed fast-tracking critical mineral development for the global energy transition.
READ: ALN Analysis – Key Trends Shaping the Future of the Mining Industry in Africa
2. Financing Africa’s Mining Future: The financial dynamics in Africa’s mining sector stand out as another pivotal force in 2024 as companies grapple with the imperative to fund expansions necessary to meet the surging demand for minerals integral to the global energy transition. The industry faces an investment dilemma, however, with an extraordinary need for new mine investments to keep pace with future energy transition – estimated at $1.2 trillion across transition metals by 2050 – hampered by a lack of consensus on who should foot the bill and how the value chain should evolve. Navigating financial complexities while aligning with sustainability goals will demand innovative solutions, impacting the trajectory of the sector.
READ: BMI (a Fitch Solutions Company) Analysis – Mining And Metals Key Themes For 2024
3. Sustainability Imperative: ESG Forces Reshaping Mining – Against the backdrop of global decarbonization efforts, the mining industry faces complex operational challenges and mounting stakeholder pressures. In 2024, sustainability and ESG considerations are expected to shape the industry further, with heightened investor scrutiny, regulatory action, and mounting expectations for sustainability performance. The microscope will likely be on companies’ Net-Zero commitments, credible climate plans, tailings management, and biodiversity considerations – aligning with the Taskforce on Nature-related Financial Disclosures.
READ: BMI (a Fitch Solutions Company) Analysis – Sub-Saharan Africa Macro Key Themes For 2024
4. Navigating Geopolitical Risk: The intensification of geopolitical competition will be another key trend for the mining industry in 2024, commanding heightened attention from companies and countries alike. This imperative will be accentuated in the realm of critical minerals, which have assumed paramount importance in driving the global green-energy transition. In recent years, we have seen tangible manifestations of this in the form of export controls and resource nationalism, with countries like Zimbabwe banning the export of raw lithium to incentivize local processing and Indonesia, a significant player in nickel, took steps to restrict nickel ore exports. These geopolitical actions pose major risks to global markets, exerting influence over commodity prices, trade relationships, economic conditions, and interconnected variables.
READ: Aon - Top Risks Facing Natural Resources Organizations
5. Digital Transformation: Efficiency Gains and Cybersecurity Risks – As in other sectors, digital technologies herald real benefits for the mining industry, especially in operational efficiency. However, digitisation also brings forth escalating cybersecurity threats that pose a tangible risk to the sector's operational integrity and reputation. Indeed, the increasing prevalence of Internet of devices amplifies vulnerabilities, with potentially catastrophic consequences for unsecured devices within companies’ networks. The introduction of AI-based technologies, without robust governance, further elevates the risk of data breaches. In recent years, cyberattacks targeting mining companies have been on the rise globally, underscoring the industry’s vulnerability to the threats posed by digital transformation.