Critical minerals in Africa

2. Making the most of critical mineral resources

2.1. Geological and mineral information systems (GIMS)

Understanding the continent's mineral endowments is key to informing policy and strategy. This need is recognised under AMV Cluster 2, AMGF Pillar 2 and AGMS Pillar 1. The value of such geoscientific data and information is beneficial not only for the mineral sector but also for other sectors, such as planning for logistics and infrastructure such as railway routes (African Union, 2017[52]) (African Minerals Development Centre, 2017[53]).

Nevertheless, many national authorities (geological surveys agencies or departments) do not have adequate resources to produce, manage and disseminate data and information proficiently. This is often compounded by the lack of a proper local and transborder data policy on data standardisation and harmonisation of nomenclature, as well as resource classifications and reporting systems. There is deep and pervasive information asymmetry: private mining companies invest heavily in their own exploration data. They approach governments with sophisticated 3D seismic models, geochemical analyses, and resource estimates that are far superior to the information that the state has access to. Many African states, often unable to independently verify a concession's true worth, are forced into a reactive, unbalanced negotiating position. When the true nature of deposits becomes more apparent later, government efforts to renegotiate terms often results in lengthy, drawn-out arbitration proceedings in various national and international fora.

The lack of good GMIS also means having to resort to “first-come, first-served” or “open-door” concession systems, which typically tends to favour speculative junior miners who acquire large tracts of land for minimal cost, undertake limited exploration, and subsequently sell the licenses to larger mining corporations for significant profits (International Monetary Fund, 2019[54]). If governments had access to more comprehensive data, competitive tender processes could be used instead to award mining licenses, which could yield better deals for African governments. When negotiating contracts, it is crucial for states to accurately estimate their resources and use these estimates as inputs into various financial models. In the absence of getting the financials right, countries often allow overly favourable fiscal and non-fiscal terms for the company, including low royalty rates and minimal signature bonuses. Strengthening the state's capacity to assess data independently can improve bargaining outcomes and ensure more equitable resource management (Otto et al., 2006[55]).

2.2. Investing in the National Geological Survey (NGS)

The first action that needs to be taken to strengthen GMIS revolves around the policy, legal and institutional framework for geoscientific data acquisition and processing. African governments could spearhead state-led investment to transform their National Geological Surveys (NGSs) from passive archives into active, digital, and commercial-facing institutions. For this to work, there is a need to (1) modernise tools for producing, managing and disseminating geoscientific data; and (2) undertake capacity building for personnel to interpret and manage the data.

In recent times, several countries have undertaken reforms in GMIS, including the digitalisation of existing records (moving from fragmented and often paper-based archives to integrated digital platforms). Such platforms are now the anchor for the award of mineral rights to undertake exploration, mine development and long-term planning.

National, regional, and continental-level governments could prioritise providing more funding to undertake comprehensive geological mapping, and geophysical and geochemical surveys using advanced technologies, such as airborne surveys (magnetic, radiometric), remote sensing, and AI-powered analysis to interpret large datasets. However, surveys are expensive, and many African countries lack the financial resources to fund these independently. To illustrate this, South Sudan's total landmass of 644,329 km² translates to approximately $19 million at $30 per square kilometre for high-resolution satellite imagery.

Improving quality and availability of geoscientific data enhances transparency and attracts foreign direct investment by lowering exploration risk. For example, Namibia's geological survey has used geological information systems (GIS) to improve lithium exploration (Schreiber and Nguno, 2008[56]) (Ambata, 2025[57]). The African Union's GMIS is also an example of an attempt to create a continental database for minerals such as cobalt in the DRC and graphite in Tanzania (Geological Survey of Tanzania, n.d.[58]). These have lowered entry barriers and improved economies of scale. Such national and regional GIS can digitally map resources by integrating satellite imagery, AI-driven analysis, and ground surveys.

Sustained investment in funding training for human capital is crucial. This should go beyond just geologists and geochemists to data scientists, resource modellers, and GIS specialists. Furthermore, collaborations with universities, research institutes and regional organisations like the African Minerals and Geosciences Centre (AMGC), PanAfGeo and AfricaMaVal are vital to ensuring ongoing capacity development.

Other policy recommendations include prioritising and addressing data security issues. Lastly, standardisation and harmonisation of resource classification and reporting systems are also critical. In this regard, regional bodies such as the African Union’s African Minerals Development Centre are championing the African Mineral and Resource Classification and Pan-African Reporting Code (AMREC–PARC), which aligns with the Africa Mining Vision.

2.3. Legal and institutional framework for contracts and licensing

Many African mining codes are crafted primarily to attract foreign direct investment. This approach has often resulted in a "race to the bottom”, characterised by generous tax holidays, lax environmental standards, and limited community rights (Dube, Matsika and Chiwunze, 2016[59]). While the policy and legal frameworks for awarding mineral rights have improved, several countries still have opaque, individually negotiated contracts which override national legislation and lack public transparency. Such agreements constitute a significant governance challenge, creating opportunities for corruption and undermining accountability. There are documented cases of these contracts favouring political elites at the expense of the greater populace (Fitzgerald et al., 2025[60]) (Bourgouin, 2011[61]) (ICMM and EITI, 2023[62]). Furthermore, critical contractual terms, such as restrictive stabilisation clauses and low royalty rates, are often not publicly disclosed, making it difficult to independently assess the overall fiscal take. This opacity undermines public trust and reinforces perceptions of illegal resource extraction and misappropriation, fuelling illicit financial flows in the resources sector.

To improve sector governance, African countries could (1) strengthen institutional frameworks and (2) invest in sector administration capacity building. To strengthen institutional frameworks, countries must first update their mining policies and mineral development plans, including those for critical minerals. A few countries, including Zambia and South Africa have published critical minerals strategies in recent years. However, it needs to go beyond these into having provisions to promote equitable access to licences and contracts. Other necessary actions include the need for stricter due diligence on investors by government agencies before granting mineral rights to reduce corruption risks and ensure that only financially and technically qualified companies with demonstrated ability to adhere to environmental and other legal obligations are awarded mining rights. Reviewing various mining acts to introduce competitive bidding for the more clearly delineated mineral resources can improve and ensure objectivity, compliance and transparency.

Likewise, membership in the Extractive Sector Transparency Initiative (EITI) and other global transparency initiatives can enhance standardisation, knowledge sharing, and transparency, as demonstrated in various studies (Kinda, 2025[63]) (Dosmaganbetov and Nanovsky, 2025[64]) (Moses, Houqe and van Zijl, 2021[65]). Similarly, beneficial ownership disclosure helps reduce corruption risks. Lastly, there is a need to review and update Alternative Dispute Resolution (ADR) legislation to promote the timely and practical application of ADR in resolving land and mining-related disputes. This can save considerable time and costs and is of particular relevance as a proliferation of mining activities triggers more land rights disputes.

Regarding sector administration capacity building (institutional strengthening), governments and donor partners could fund staff (in mining ministries, associated agencies, and other relevant ministries) to build the required technical skills and managerial capabilities. This can include short-term training both within and outside the country, as well as support for master's and PhD programmes. Such technical assistance training is already being provided through the African Legal Support Facility (ALSF) and the African Development Bank (AfDB) to various countries (African Development Bank Group, 2023[66]).

2.4. Fiscal revenue collection and management

Effective fiscal policies are essential for capturing the full value of mineral resources. Many African countries recover only about 40% of their potential revenues, primarily due to tax avoidance and weak enforcement mechanisms (Akiwumi, 2024[67]) (Albertin et al., 2021[68]). An optimal fiscal regime for mining must accomplish three goals: firstly, ensure a fair share of the resource rents goes to the state; secondly, offer predictable revenue flows without discouraging investment (stability); and lastly, be resilient against price swings and corporate tax avoidance (Natural Resource Governance Institute, 2015[69]) (Land, 2015[70]). This is particularly important given the key challenges of the minerals sector, such as inherent uncertainty about the resource base (in terms of quantity, quality, and depletion paths), significant rent potential, market and technology-induced volatility which affects production and costs, and the long mine lead times and heavy upfront costs (Natural Resource Governance Institute, 2015[69]) (Land, 2015[70]).

Many African mining fiscal regimes fall short on these three goals (Oshionebo, 2020[71]). The royalty base is often low and offers generous tax holidays to attract investment, but it is also highly vulnerable to price crashes and aggressive tax planning by multinational corporations. Governments in the past have also sought to constantly change the fiscal regime, creating further uncertainty and distorting.

These pressures are evident in Africa's critical minerals sector. Falling lithium prices – down 80% from November 2022 peaks – have led mining companies to request fiscal concessions to maintain project viability. For instance, one major lithium project in Ghana saw its internal rate of return drop from 105% to 13.6%, prompting demands for reduced royalty rates, lower corporate taxes, and import duty exemptions (Reuters, 2025[72]) (Jamasmie, 2025[73]). However, civil society groups warn that granting permanent concessions during temporary price downturns could undermine long-term national interests if prices recover, recommending that governments independently verify company projections before revising fiscal terms (Gyeyir and Scurfield, 2025[29]).

While no single tax instrument is flawless, an effective modern fiscal regime for critical minerals should comprise a balanced combination of instruments that address the state's requirements while maintaining investor confidence. Such an integrated approach for many traditional concession contracts could include:

1. Royalties (on revenue/production): a tax on the value of the minerals extracted. Its great advantage is that it is simple to calculate and must be paid regardless of the project's profitability. This provides a stable, minimum revenue floor for the state from day one. Royalties could be on a sliding scale tied to mineral prices or a fixed lower tier to improve profitability, given they tend to be regressive instruments.

2. Corporate Income Tax (CIT) (on profits): the standard tax on a company's profits. It allows the state to share in the project's success. However, effective mechanisms are necessary to audit costs and prevent base erosion and profit shifting (BEPS). CIT rates generally tend to be higher for mining than for general industry. Given that most critical minerals are bulk in form, an argument could be made for taxing them at the normal corporate tax rate rather than at higher specialised ones.

3. Resource Rent Tax (on windfall profits): the windfall tax kicks in only in periods of exceptionally high prices, such as seen with lithium and cobalt in 2021-2022. This would allow the state to capture a much larger share of the “windfall” profits during booms without deterring the initial investment.

4. Reduced tax rates and incentives: these could be extended to companies that set up processing and other downstream activities.

Other new contractual forms being considered by governments include mining production sharing agreements (PSAs), a contract between a government and a mining company where the company assumes the financial risk of exploring and extracting mineral resources, while the government retains ownership of the resources. The company is entitled to a share of the production after it recoups its exploration and development costs. PSAs are widely used in the petroleum industry (Pereira et al., 2023[74]). Mining PSAs, although limited in their use with non-fuel minerals compared to traditional concessions, are gaining traction in the industry, with civic groups advocating for their adoption (Readhead et al., 2023[75]) (IGF and ATAF, 2022[76]) (Omonbude and Mataba, 2024[77]). To the best of our knowledge, no African country is currently using mining PSAs for allocating critical mineral rights.

2.5. Linkages, investment and diversification

The evidence consistently shows that many years of mining on the continent has failed to transform the fortunes of the continent’s economies significantly. Several commodity-producing and exporting countries have become caught in the so-called resource curse, also known as the “paradox of plenty” syndrome. More strategic use of critical mineral revenues will not only help African countries achieve their climate goals but will also contribute to the development of a more resilient and diversified economy.1

The current minerals boom offers a window of opportunity to break this cycle. However, success relies on a clear national, regional, and continental industrial strategy that develops industrial linkages, strengthens technical skills, and invests in critical infrastructure to enable establishment of industry that is necessary for going beyond just extracting and exporting raw materials.

Most of the value within the critical mineral and energy supply chain lies in the complex midstream (processing, refining) and downstream (manufacturing of precursors, cathodes, and batteries) stages. Currently, these are primarily concentrated in Asia, particularly in China. To capture more of this value, African producers need to put in place the elements for value addition (beneficiation). These include adequate infrastructure, affordable finance, reliable and competitively priced utilities (especially electricity), a skilled workforce, a stable regulatory environment and economies of scale (Logan and Acheampong, 2025[78]). If any of these enabling factors are missing, production costs for local manufacturers rise, making their products more expensive and less competitive.

Some existing and emerging producers have significant infrastructure for refining and smelting traditional commodities such as copper, ferromanganese, platinum group metals, and aluminium. There are facilities across Zambia, Morocco, DRC, South Africa, Ghana, Guinea, Mozambique, Cameroon, and Egypt. These mineral processing and metallurgical production plants provide a firm foundation upon for further industrialisation.

Also, for many nations, a regional approach is more viable than pursuing a standalone strategy. The African Continental Free Trade Area (AfCFTA) provides the essential framework for collaboration, creating a larger, more attractive single market. Ongoing initiatives include the Walvis Bay Corridor and the potential extension of the Lobito Corridor railway into Zambia, which is being led by the African Finance Corporation with support from the US, the EU, AfDB and others. The Lobito corridor would also anchor US DFC’s recent pledge to deepen partnerships with the DRC and Rwanda (U.S. International Development Finance Corporation, 2025[79]). The rehabilitation of the TAZARA railway, which offers an eastward route for mineral resources from Zambia’s Copperbelt to Dar es Salaam in Tanzania, is instead supported by China.

Efforts to expand into midstream and downstream processing are often accompanied by robust local content policies aimed at fostering horizontal linkages across the economy. These policies should be pragmatic and extend beyond simple employment quotas, requiring mines to procure a wider range of complex services – such as engineering, financial management, logistics, and light manufacturing – from qualified local firms, often in partnership with foreign companies. Such measures are essential for building a sustainable and skilled industrial base that can outlast the lifespan of individual mining projects.

Financing the necessary infrastructure will require a blended approach. Development assistance from partners such as the World Bank’s Multilateral Investment Guarantee Agency (MIGA), the EU Global Gateway, and others plays a crucial role in de-risking large-scale projects by providing political risk insurance, which can, in turn, attract additional private capital.

2.6. Maximising the contribution of artisanal and small-scale mining (ASM)

If ASM is a feature across all geographical regions, it is particularly prevalent and concentrated in African countries. ASM is characterised as labour-intensive mineral extraction, usually using low-tech equipment and processes (Karaki, 2018[80]). It is generally informal and is pursued as a path out of poverty or to supplement insufficient income, especially in rural areas where alternative employment options are extremely limited (IGF, 2017[81]). ASM activities are often located in close proximity to large-scale mining operations and may exploit abandoned mines where these are accessible.

ASM contributes a significant share of mining employment across much of Africa – at least 10 million miners are involved in ASM in sub-Saharan Africa, with another 60 million who are supported by or have livelihoods in associated industries (World Bank, 2019[82]). Production volume from ASM sources vary depending on the mineral and the countries, spanning, beyond precious metals and precious gemstones, base metals (like copper) and critical minerals (tungsten, tantalum, lithium, cobalt, etc.).

The announcement in November 2025 that, through its Entreprise Générale du Cobalt, the DRC produced its first 1000 tons of traceable artisanal cobalt is a key step in formalising the sector in the country. Context-sensitive approaches that balance accountability with inclusivity are essential.

However, the nature of ASM presents a particular set of environmental and safety risks. In the absence of proper safety equipment or separation equipment, toxic chemicals used to separate minerals poisons both ASM workers and the air, water, and soil around ASM operations. Small-scale miners often leave their open pits unrehabilitated and deforestation is increasingly associated with an expansion in ASM activities. As demand for critical minerals grows, ASM has further proliferated, with a commensurate increase in mine accidents and fatalities.

In order to unlock the full potential of ASM exploitation on the continent and limit the external negativities associated to this sub-sector, a protracted, coherent combination of policy measures and market interventions to support the formalisation and legalisation of ASM activities need to deployed. African governments as well as international partners have long identified this strategic imperative. However, due to its considerable set of challenges, ASM formalisation remains limited in Africa.

Note

← 1.  For detailed analysis, see Farooki, M. (2025).