The need to transform the global energy system and to cut carbon emissions, to counter the danger of climate change, is shifting the mining spotlight away from traditional high-value resources, such as gold and diamonds, to what are now being called “critical transition minerals”. So stressed global management consultancy Kearney partner Prashaen Reddy, highlighting important themes at last week’s Investing in African Mining Indaba 2024 conference, held in Cape Town.

“These critical transition minerals encompass a spectrum of resources including copper, which remains the cornerstone in wiring and electrification,” he explained. “Additionally, critical transition minerals such as nickel, cobalt and lithium are crucial in solar, wind and hydropower installations, as well as in the production of battery energy storage systems and electric vehicles. These critical transition minerals are economically significant resources essential for facilitating the global energy transition but are accompanied by a heightened risk of supply disruption.”

However, what “critical” meant in developed countries and what it meant in developing countries were not necessarily the same, he cautioned. Developed countries were focused on the energy transition. For African countries in particular, using critical minerals to achieve socioeconomic development was as important as the energy transition.

In the case of South Africa, the country remained heavily dependent on coal, for both electricity generation and petrochemicals production. Coal remained a critical mineral for the country. It could not immediately stop using the energy mineral. Rather, coal had to form part of South Africa’s energy transition.

However, another key theme at the conference was the growing salience of environmental, social and governance (ESG) issues for mining companies. ESG included sustainability and the development of circular economies.

“ESG performance has emerged as a pivotal concern in global supply chains,” he highlighted. “Governments worldwide are exerting increasing pressure on investors to prioritise green objectives and align financial strategies with environmental sustainability goals. Initiatives such as carbon taxation and import tariffs, which include the [European Union’s] Carbon Border Adjustment Mechanism, are reshaping global supply trends and exerting significant influence on the mining sector, particularly here in Africa.”

The future of the mining industry, especially in Africa, was being reimagined and negotiated. This was a response to both environmental and international political challenges. “We must strive towards enhancing the resilience of our people and communities while concurrently decarbonising operations and supply chains,” he concluded.