JOHANNESBURG (miningweekly.com) – "My genuine sense is that we are going to see a growth in the mining sector of an order of magnitude we haven't seen.

"I also think that we're going to find that the need for minerals is going to force the world to think that if we can’t get minerals on our shore, where else do we get them from?

"When we think about the electric vehicles and their batteries, we are thinking about as much as 30 years of supply of matters based on today's demand.

"When we started to industrialise, we started with people being poor, and as we became more affluent, demand grew.

"We are affluent now. We want and can afford our cars now. We want and can afford our appliances now. We just want them wired differently.

"This is demand of the order of magnitude we have never seen and therefore it is unlikely that we have enough minerals to meet that demand. So, the question of where else do we find them is the biggest question that we have yet to answer."

These are the words of Sheila Khama, a nonexecutive director at Tullow Oil plc (FTSE 250) and The Metals Company (NASDAQ), and former CEO of De Beers Botswana, former director of Debswana, and former policy extractives adviser at the World Bank and the African Development Bank.

Khama spoke to Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video.)

Included in her in-depth responses were:

• the need for Africa to step up minerals exploration;
• the need to counter the perception that the regulatory environments are unstable and therefore unattractive for miners who take a long view;
• the need for Africa to benefit by being part of the ripple effect that the new critical mineral economic wave has the potential to generate.

Khama foresees that for some African countries, the benefit will be from scale-up rather than a change of direction, while for others, it has the potential to be nigh transformational.

These are the questions and responses.

Mining Weekly: Firstly, what do we mean by critical minerals?

Khama: I think this is an important question to answer because it's not self-evident. When we speak about critical minerals, we are talking about metallic substances whose supply is critical to a particular industrial innovation or particular industrial development phase, in our economic development. We mean that for us to achieve that end state industrially, the contribution of those minerals is central. That's basically what we mean by a mineral being critical. It is not inherent, and it is not in the nature of any one specific mineral.

What is the difference between critical minerals and rare earth elements?

When you listen to some, they use critical minerals and rare earths as being interchangeable. The first thing is that they're not, though they're also not mutually exclusive. You could have some rare earth elements that are critical to some development, but rare earths themselves really are part of if you think about your school days, the periodic table and they sit in the purple space. They are rare, not because they are rare in their occurrence, but they are rare because they very rarely occur in economically feasible quantities, and they include substances like plutonium, and they tend also to have certain qualities like being magnetic and have certain applications that are strategic, but they are not necessarily all critical in nature.

So, does this mean that minerals are not inherently critical?

Yes, it means that minerals are not inherently critical. It means that the critical nature of minerals is driven by demand and sometimes scarcity, and sometimes technological trends that suddenly put that mineral at the centre of industrialisation. For instance, in our time, minerals like nickel, manganese, cobalt, and lithium are critical for the decarbonisation of the world's economy because they're critical to the manufacturing of batteries to store energy. They have become critical because we made a decision to move away and then somebody innovated. If this innovation changes, and we can move from fossil fuel-intensive energy sources, to less fossil fuel-intensive energy, without the need to store energy in batteries, these minerals will cease to be critical, and some other mineral or other substance may substitute them.

What do we know about Africa’s endowment when it comes to critical minerals?

The short answer is a lot but also not enough. What we know is that certain African countries are very well-endowed with some of the critical minerals. In this respect, the Democratic Republic of Congo (DRC) is second to none. The DRC is reputedly producing today, up to 60% of cobalt, and cobalt is one of the critical minerals that we are looking at today. We also know that there are significant lithium deposits in Zimbabwe, Guinea Conakry has massive high grade deposits of bauxite etc, but what we haven't done in recent times is undertake sufficient exploration to know in the 53 other countries what is the status of these minerals that have been developed over years, and they just happen to now find themselves in the space of being critical; but cobalt, bauxite, lithium and others were already being mined before we got to where we are. What we don't know is if we explore, who else might join those ranks.

What should regional governments do to benefit from the growing demand for critical minerals?

The first thing that we need to understand is that over the last 20 years or so, exploration expenditure in Africa relative for instance, to Latin America, Asia and Canada, has dropped significantly. Now, exploration is in mining what research and development is in pharmaceuticals. You have no future if you have a pharmaceutical firm and you're not doing research and development, because the pipeline of new drugs will dry out. The same applies in mining if you're not exploring the pipeline of discoveries of deposits, and those that are economically feasible, will dry out. The result is that you have very little mineral output. That's the first point of departure. African governments need to counter the perception that the regulatory environments in the region are unstable and therefore unattractive for miners who take a long-term view. If we do this, then we will attract investment and with that investment, have the discoveries to begin to benefit, at least from the commodity trade.

Are the benefits from the use of critical minerals, to transition to cleaner sources of energy, only confined to raw materials?

No, as a matter of fact, because, as I’ve said, the critical nature of the minerals is just a time and place in terms of technology and demand. But in effect, the value chain for these minerals is pretty much the same as any other, which is to say you start at the top with a commodity, you process it into a concentrate, you then create a metal substance out of it, and out of that you create component part in manufacturing. And as you do all this, the ripple effect economically is great, and so for African governments to benefit, they have to be part of that ripple effect.

What else can be done, therefore, to increase benefits beyond trading of the commodities?

Well, quite apart from ensuring that the region is competitive in terms of attracting exploration, one of the things that the governments have to do is really look at the issues today that impede manufacturing and industrialisation. In the Southern African Development Community (SADC), it's no secret, my grandma can tell you, that we suffer a significant energy deficit, so it's a tough sell to try and get manufacturers to come to the region, to process matters and manufacture in a place in which load-shedding is the order of the day. As you go downstream, these processes are very, very energy-intensive, so we’ve got to plug in to this problem of energy deficit but we’ve also got to then ramp up skills in terms of technical vocational education and training skills, digital technology, because in manufacturing today, you operate in this space. There are a groundswell of initiatives that need to be put in place, capacity enhanced, to be able to attract those who are going to manufacture the batteries and the cars. If we don't do that, they will go away, those infrastructures exist.

What else is presently getting in the way of countries in Africa benefiting from the growth in demand for critical minerals?

Well, part of it is just innovation. The batteries, the electric vehicles, they're all designed and conceptualised elsewhere, and I think with low scientific and technology skills in the region, for us to come up with the same hubs that we have seen over the years, as is the case with Silicon Valley, we can’t always be dependent on other people, and the important thing to realise is that actually these digital appliances and other related component parts, in economic value in cost, are much higher than the big trucks that we bring into the country. While most of us are looking at the physical nature of industrial products, actually it’s the component parts that actually have higher economic value. We need to focus on that and to do so, our education system has to change to deliver the type of skills necessary to plug into this new technological innovation called the Fourth Industrial Revolution.

What will be the overall impact of the growing demand for critical minerals on the mining industry?

Well, you know, I have been intrigued, and sort of confirmed my suspicion, that mining may well benefit from this growing demand for critical minerals but not just benefit financially but benefit in terms of the reputation of mining and the perception of mining as critical to our livelihoods. Mining over the years has gotten a bad name. My sense is that mining is about to get an opportunity to revisit and reposition itself as part of the solution rather than being the problem and I think if mining plays its cards well, this decarbonisation is going to make mining not only relevant, but more accepted as part of the way we do business and not the enemy of the State, as it were.

Are any countries already benefiting from this?

I haven't yet seen countries in the region that are benefiting directly from the decarbonisation in the mineral space. The countries that are benefiting well, already producing those substances, like Zambia's copper, like the DRC’s copper like South Africa's manganese, and for that matter, the cobalt that we spoke about. The benefit there is just going to be scaling up rather than a change in any direction. The countries that are more likely to benefit, in terms of just starting from scratch, are those like Mozambique and Tanzania, because they have a huge deposit of gas, and gas is considered the environment-friendly fossil fuel for transition and has been endorsed by the European Union, so the experience for those countries will be nearly transformational.