As global demand for energy transition minerals like cobalt, copper, lithium and rare earths rises, West African nations are striving to maximize their share of economic benefits from their abundant natural resources.
Investment and infrastructure development
To capture more value from their mineral wealth, African countries are increasingly mandating mining companies to invest in local processing and refining, as well as in transportation and energy infrastructure. This trend aims to enhance the value chain and ensure that local populations benefit from the energy transition. However, West Africa faces significant infrastructure challenges, including high transport costs and limited electricity access, which hinder economic growth.
Public-private partnerships and co-development
In response, cash-strapped governments are turning to public-private partnerships and co-development agreements to finance essential mineral infrastructure. These partnerships are designed not only to support exploration and development but also to stimulate new industries and markets, thus boosting economic transformation and increasing revenue and job creation from critical minerals.
Country-specific developments
- Guinea: The TransGuinean railway project, a $18 billion initiative, is progressing through a joint venture involving the Guinean government, Rio Tinto Simfer, Winning Consortium Simandou, and Baowu. This project includes over 600 km of railway and shipping infrastructure to transport high-grade iron ore. Additionally, Guinea has partnered with Guinea Aluminium Company (GAC) for a $4 billion alumina refinery project.
- Junta-run Nations: In Niger, Burkina Faso, Mali and Chad, Russia is becoming a significant partner, supplanting traditional allies. Russia’s Rosatom is in talks with Niger’s authorities about acquiring French assets, and the Wagner Group is reportedly interested in Mali’s Loulo-Gounkoto gold mine.
- Liberia: Under President Joseph Boakai, Liberia is seeing increased mining investment, including High Power Exploration’s Liberty Corridor project. However, concerns about potential conflicts with existing operations, such as ArcelorMittal’s railway, are complicating matters.
- Senegal: The new Senegalese administration plans to audit the extractive sector to address potential imbalances and ensure adherence to local content provisions and fiscal obligations.
- Nigeria: Nigeria’s mining sector is attracting interest for lithium and gold exploration. The government has mandated that companies establish processing plants within the country to mine and export lithium, with Chinese firms already investing in processing facilities.
- Ghana: As Africa’s leading gold producer, Ghana is pushing for increased domestic gold refining. President Akufo-Addo’s mandate requires refineries to sell 20% of their output to the Bank of Ghana. However, without LBMA accreditation, local refineries may struggle to attract gold from miners.
Navigating a complex landscape
West Africa’s mineral wealth is attracting a diverse range of investors from traditional and emerging economies, including Russia, China, India, Saudi Arabia, and the UAE. The region’s strategic location and rich resources make it an appealing destination, but challenges such as insecurity, political instability, and the need for domestic mineral processing complicate the investment environment.
To succeed in this complex landscape, the mining industry must develop a thorough understanding of local political and economic dynamics. Engaging with the system and shaping mining policy will be crucial for navigating the region’s intricate web of stakeholder relationships and ensuring successful outcomes.
