Africa's mining industry is poised for a significant boost, as the demand for critical minerals used in renewable energy technologies continues to grow; however, several barriers to foreign investment in critical minerals in Africa remain, including political instability, corruption and conflicts over land use, reports law firm ENS.

ENS is a sponsor of the upcoming Joburg Indaba to be held on October 4 and 5 at the Inanda Club, in Johannesburg.

Currently, investors look for African countries with the most liberal and investor-friendly regimes, meaning African countries must leverage the opportunity offered by increased demand for critical minerals by creating a conducive investment climate and making their jurisdictions attractive to investment, says ENS natural resources and environment head Ntsiki Adonisi-Kgame.

She emphasises that African countries can grasp this opportunity by developing progressive mining laws that ensure critical minerals are locally beneficiated to stimulate economic growth.

“Africa must come together to create capacity and invest in infrastructure that will make it possible to process critical minerals in Africa, because without developing [in-continent beneficiation] capabilities, the value from critical minerals will not be realised [for Africa],” states Adonisi-Kgame.

Ultimately, taking full advantage of the opportunities offered by critical minerals demand requires significant investments, innovation and technological capabilities, she adds.

Adonisi-Kgame notes that African countries have adopted the Africa Mining Vision to promote the transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socioeconomic development.

Further, there have been concerted efforts by various African countries to modernise Africa’s mineral regulation frameworks; however, mineral regulations still remain fragmented on the continent, she says.

Therefore, Adonisi-Kgame posits that the regulatory framework must be clearly defined, transparent and stable, with no political involvement or corruption.

Further, ideal regulatory frameworks must also make provisions for free trade and easier market access in Africa.

In January 2021, the African Continental Free Trade Area (AfCFTA) came into effect – a framework that promotes intra-African trade and will be crucial in creating critical minerals supply chains.

To support the mining industry, she suggests that African laws should lay out a stable political environment and form reasonable macroeconomic policies – ultimately, laws that protect investment and provide protection against expropriation are crucial.

Adonisi-Kgame explains that this is typically achieved through a country's Constitution, which guarantees property rights and provides investors and the mining industry with a level of certainty.

Incentivised Exploration
Adonisi-Kgame asserts that mining laws must promote exploration, mining and beneficiation of critical minerals within host African countries – an effort that will stimulate economic growth and increase employment in Africa.

Governments must recognise the strategic value of critical minerals for domestic and regional economic development, she says, adding that governments need to be open to negotiating mineral rights conditions as part of a domestic industrial policy for structural transformation.

Adonisi-Kgame emphasises that managing the geopolitics of critical minerals, and the identification of strategic global alliances for domestic productive development are crucial to encouraging investment.

“By locating domestic strategies as part of regional industrial development plans, African countries can apply more bargaining power and realise greater cluster and scale economies,” she says.

Adonisi-Kgame points out that key discussions at the Joburg Indaba are likely to revolve around the South African Department of Mineral Resources and Energy’s hosting of the Mineral and Petroleum Resources Development Act review summit on July 13 – where gaps in legislation were discussed with key stakeholders, and the African Critical Minerals Summit which was held on August 29.