Extraction to industry: Africa's mineral resources face new test

The defining economic question for Africa's resource-rich states is no longer whether to mine, nor even whether to industrialise on what they mine. That much is settled. The real question is where the value is captured, at home or abroad, how much of it, and on what terms.

Africa holds around 30 per cent of the world's critical mineral reserves yet captures under 5 per cent of the value added in mineral supply chains. The shortfall is not geological. It is a question of industrial architecture: who refines, processes and manufactures, and who exports with little of that value added. The margin sits in the middle of the chain, and that middle sits largely elsewhere: China alone refines close to 70 per cent of the world's critical minerals. Africa is not short of ore. It is short of the industry that turns ore into value.

That industry is, before anything else, an energy proposition. Value addition is an energy and logistics business before it is a minerals business. A refinery, a smelter or a glass plant cannot run on unreliable power, and sub-Saharan Africa still carries roughly 85 per cent of the world's electricity-access deficit. Firm, affordable, low-carbon power is the first industrial input, not an afterthought. Any beneficiation strategy that does not begin with energy is a strategy on paper.

It is also a matter of sequence, and the international record is instructive. Indonesia is the case most often cited, and it cuts both ways. By restricting raw nickel exports, it built a domestic processing industry where almost none had existed, a real achievement. But it ran stop and start, and the build-out left new vulnerabilities: heavy reliance on a single buyer, and capacity raised ahead of demand. Value capture and value diversification are different achievements. The lesson is not that bans work, but that capability must be built before, or alongside, any prohibition.

Africa's own experience shows both what works and what recurs when the job is left half-done. Botswana moved diamond sorting, valuing and sales onshore to Gaborone and grew a local cutting and polishing industry, turning a mine into an economy. Morocco processes its phosphate into fertiliser at home, increasingly on its own solar power, and exports the finished product rather than the rock. These are value captures done deliberately. The harder cases are as instructive.

The Democratic Republic of Congo's cobalt export controls moved the market, but their quota has been slow to fill, a reminder that policy can move faster than the infrastructure and logistics needed to deliver it. Zambia's repeated changes to its mining royalty regime show how shifting fiscal rules can leave major copper investment waiting on the sidelines. Tanzania's 2017 ban on mineral concentrate exports produced a substantial negotiated settlement with foreign miners, but the leap to a domestic refining industry remains incomplete. The difference is not ambition; it is sequencing.

Episodic bans and shifting rules are the symptom of industrial policy's absence, and they recur with every price cycle and every change of administration. The cycle breaks only when processing capacity, stable rules and reliable power are built together, and when demand is secured regionally rather than staked on a single foreign buyer. This is the case for treating the African Continental Free Trade Area as an industrial-policy instrument: the demand base that makes processing bankable, not merely a trade agreement.

Which brings the argument home to Lake Magadi. For more than a century, soda ash has left the lake in Kajiado County as a bulk commodity, with little of the downstream manufacturing- container glass, sodium chemicals- that would multiply its worth. Soda ash is itself a processed product; this is not raw rock leaving, but value addition stopping one step too early. The community that hosts the operation has borne the local cost, felt it most in drought, and seen little of the return. That picture is now changing.

Amid an ongoing dispute over the incumbent's concession, the government's message is clear: it expects future operations to include local processing as a primary condition. The question is no longer whether value should be added at home, but how to get the how right.

Getting it right means applying the discipline the wider record teaches. Set the local-processing condition through an open, rule-bound, transparent process, so terms are predictable and durable rather than reopened each cycle; reworking decades-old contracts carries real legal risk, and clear rules for what comes next are the safer route. Back it with power that matches the ambition.

The first steps are visible at Magadi, where on-site solar and a first-of-its-kind electric calciner already cut the carbon of extraction. The harder leap is beneficiation itself, a continuous, high-heat process that daytime solar alone cannot carry and that makes Kenya's geothermal baseload a genuine strategic asset. There is a commercial edge, too. The European Union's carbon border levy, now in its financial phase, already prices the carbon in imported steel, aluminium and fertiliser, and such rules tend to widen. For Africa's beneficiation drive, and any Kenyan value addition that reaches those markets, clean processing is becoming a condition of competitiveness, not only a climate choice.

And it means making the host community a partner, not a bystander. Kenya's Mining Act already provides the tools: mandatory community development agreements and royalty revenue shared with host counties and communities. The principle is settled; the task is enforcement, paired with local jobs, local procurement and honest environmental assessment.

Magadi is a test of whether Kenya can capture value at home. The sequence that works is not complicated: secure the baseload power first, set predictable rules for communities and investors next, and mandate local processing on that foundation. The larger test, from Jakarta to Kinshasa to Kajiado, is whether producers follow it, industrialise deliberately, sequence with discipline and coordinate regionally, and so keep the value that has too often left with the ore.

 -The writer is Director at Africa Futures Policy Hub and Enzi Ijayo Africa Initiative