A range of solutions for commodity-rich African countries to work on with the automotive sector in a re-think of industrial policy around critical minerals were proposed during a high-level interactive workshop at the Investing in African Mining Indaba, which took place last month in Cape Town.

In the emerging energy transition era, the convergence of the mining and automotive sectors is set to shape the industrial strategies of many companies and countries, offering significant opportunities, balanced by a fair amount of risk. The workshop sought to map policy, strategy and value chain solutions to help African countries navigate this challenging new environment.

The panel was moderated by Arena Partners partner Dr Martyn Davies, and featured Industrial Development Corporation acting manufacturing divisional executive Mark Goliath, World Economic Forum mining and metals industry manager Tatiana Aguilar, African Association of Automotive Manufacturers CEO Dave Coffey, Arthur D. Little Natural Resources Competence Centre senior principal and global head Ilya Epikhin and International Finance Corporation manufacturing and consumer services principal investment officer Ken Osei.

“There is good news and bad news,” said Davies, noting that the bad news is that the super cycle driven by Chinese growth, that has underpinned the entire development trajectory of Africa, is over. “The good news is that a new super-cycle is emerging – driven by critical minerals and the energy transition.”

He added that the new super cycle is powering a growing new mercantilism – national economic policies to encourage exports.

“States are increasingly acting independently,” said Davies, adding that, at the same time, automotive companies are going upstream, investing in their supply chains, often supported by countries.

The workshop brainstormed ways for countries on the African continent to take advantage of this new trend by encouraging and facilitating the mining-automotive convergence.

Participants in the workshop suggested there be further integration into the downstream purchasing of minerals to ensure the sector produced exactly what is needed by manufacturers.

“We can start by further integrating platinum to produce catalytic converters in South Africa,” said Epikhin. This would allow focus on downstream manufacturing to go deeper, into the other tools and machinery needed.

“Miners need to increase production volumes needed to supply demand. So, further integration of these partnerships to look into exploration activities could also be beneficial,” he said.

Epikhin and his working group further proposed that governments incentivise companies to use a higher percentage of local content using AI tracing systems.

“There could be increased usage of AI by original-equipment manufacturers to assess the country of origin for metals used,” he said, adding that this basically ensures that more value is added and will encourage downstream sector development.

Another group noted that an easy win to encourage upstream investment would be to conduct more geological surveys.

“If we can make geological information more easily available, the investment opportunity would be far more attractive for investors,” said Aguilar, while Coffey noted that it was important that Africa address convergence opportunities at a regional level.

“Regional partnerships bring the power to negotiate. We need the African Continental Free Trade Agreement to bring in all the players and the new economies. There must also be political willingness to implement industrial policy. That requires deliberate, courageous leadership from the public and the private sector,” added Coffey.

Noting that the electric vehicle sector was still in its early days, Osei added that investment in the mineral-automotive convergence “is an investment in the future”.