Local mineral refining could unlock a 120 billion market across Africa

The raw material paradox

The transition to a low-carbon global economy relies on a fundamental shift from a fuel-intensive energy system to a material-intensive one. Electric vehicle batteries, wind turbines, and high-voltage transmission networks require unprecedented quantities of specialized metals to capture and distribute energy. In this industrial paradigm, the African continent holds a position of geological leverage. Analysts observe that Africa supplies roughly three-quarters of the world’s manganese, seven-tenths of its cobalt and nearly a fifth of its copper. These elements represent the irreplaceable physical inputs of modern electrical industries.

However, the financial returns on this endowment remain highly asymmetrical, revealing a structural imbalance in the global supply chain. While the physical material originates in African soil, the economic value is realized elsewhere. Industry data indicates that the continent captures less than 1% of the value generated from manufacturing the clean energy technologies those minerals make possible. This disparity stems from an entrenched economic model where raw ores and basic concentrates are exported for processing and manufacturing in advanced industrial hubs.

The International Energy Agency calculates that altering this model by capturing the midstream refining segment would yield a significant economic dividend. The agency projects that if domestic refining is strategically scaled up, the combined market value of key minerals could increase by three-quarters between today and 2040 to reach USD 120 billion. To put the magnitude of this potential new revenue stream into perspective, the International Energy Agency points out that for comparison, total exports of all goods from African countries were worth around USD 680 billion combined in 2024. Securing this USD 120 billion market would represent a realignment of the continent’s industrial output, shifting it away from the volatile export of raw earth toward the stable export of industrial chemicals and purified metals.

The macroeconomic imperative

The urgency of capturing this value extends beyond corporate balance sheets; it is a macroeconomic necessity. Across the continent, governments are struggling to fund public services and infrastructure upgrades. The World Economic Forum highlights that Africa faces a development financing gap of $1.6 trillion, consistently failing to meet its needs across health, education, energy and infrastructure. Traditional avenues of sovereign borrowing are becoming increasingly constrained by high interest rates and debt sustainability concerns. By transitioning from a low-margin exporter of raw materials to a high-margin exporter of refined industrial products, governments can expand their tax base and royalty revenues without taking on additional foreign debt.

The downstream economic multipliers of this transition are substantial. Refining facilities require specialized engineering, logistics networks, and secondary chemical supply chains, all of which stimulate the broader domestic economy. The World Economic Forum estimates that pursuing beneficiation (the treatment of raw materials) could indeed raise the continent’s GDP by 12% and create approximately 2.3 million high-quality industrial jobs. These jobs represent a shift away from the labor-intensive extraction phase toward the advanced manufacturing and chemical processing sectors that historically drive economic modernization.

The arithmetic of moving downstream

Achieving this valuation requires the large-scale construction of highly specialized chemical separation and metallisation facilities. The continent must systematically increase the proportion of mined output that is processed locally before it reaches the port. The starting point for this industrialization varies depending on the specific commodity. For some legacy metals, a foundation already exists. The International Energy Agency observes that today, domestic refining of copper is far more advanced than refining of most other minerals, with over 60% of African mined copper being refined domestically.

However, for the specific metals driving the battery revolution, the domestic refining base requires aggressive expansion. To capture the full economic prize, researchers model a scenario where copper refined domestically rises from 62% of mined output to 80%; cobalt from 3% to 13%. Moving cobalt refining from 3% to 13% across the continent requires building complex hydrometallurgical plants capable of treating corrosive acids and by-products at scale.

The most pronounced shift in the continent’s refining landscape is expected to come from fertilizer components. As the electric vehicle industry increasingly turns to lithium iron phosphate chemistry for its battery packs, the demand for high-purity phosphoric acid has surged. Consequently, researchers project that phosphate overtakes copper as the continent’s most valuable refined mineral, driven by purified phosphoric acid for the lithium iron phosphate batteries. This chemical pivot heavily favors North Africa, where the geology and the capital are aligning. Demonstrating the scale of this shift, analysts note that Morocco, holding the world’s largest phosphate reserves, saw battery-related investment hit USD 15.3 billion in a single year.

The physical and financial friction

If the economic case for domestic refining is compelling, the obvious question is why it has not already happened organically. The answer lies in the physical and financial friction inherent in operating heavy industry in emerging markets. Refining is a matter of energy and capital, and currently, the continent faces a deficit in both. Mineral refining, whether through high-pressure acid leaching or thermal smelting, is an extraordinarily energy-intensive endeavor. In many African mining jurisdictions, national power grids lack the transmission capacity or the generation reliability to support continuous, large-scale industrial loads.

As a result, facility operators are forced to build their own off-grid power solutions, typically relying on expensive imported diesel. This infrastructure gap translates directly into a structural cost disadvantage. Market data reveals that energy makes up 44% of post-mining production costs — a quarter higher than in Latin America. Compounding the physical cost of energy is the price of finance. Building a modern refinery requires hundreds of millions of dollars in upfront capital. When international investors assess projects in developing economies, they apply steep risk premiums to account for sovereign debt levels, currency volatility, and regulatory uncertainty. This drives the cost of capital to levels that can undermine project economics. Financial assessments demonstrate this penalty clearly, showing that the required equity return on a solar project runs 16% in Morocco and as much as 51% in Zambia. When a developer must promise investors a 51% return simply to secure funding, the theoretical cost advantage of being close to the mine site is quickly eroded by the cost of the loan.

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Source institutions：International Energy Agency

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