A Mining and Minerals Super-region? What Might this Mean for Africa?
Africa's resources, Gulf capital. These may be combining to forge a mining super-region.
Spanning Africa, the Middle East’s Gulf region and central Asia, the idea of a mining super-region is taking shape.
“There is a new scramble for Africa”, said a recent headline in The Economist. “Scramble” refers to a brutal period in history, the 19th- and early-20th-century colonial carve-up of the continent.
Today’s version is different. It’s about mining, and it is the leading Arab Gulf states that are seizing initiatives. Importantly, they are working with African governments to boost economic growth and uplift communities as part of their mining investments.
These Arab Gulf states have manoeuvred smartly to position themselves as catalysers of what some geopolitical and industry analysts are calling a possible mining super-region – the world’s central hub for extracting, processing and transporting much of what will be needed to power the global economy in the near future.
The evidence is the flurry of activity by the Gulf nations’ sovereign wealth funds. For instance, International Resources Holding (IRH), the Abu Dhabi-based subsidiary and operational arm of UAE’s largest sovereign conglomerate, now has an impressively diversified portfolio of mining operations or pending investments in seven African countries. IRH acquired a majority stake in Zambia’s Mopani Copper Mines in December 2023, but the $1.1 billion deal seems only the start of further major deals, having just announced its intent to add a further $1 billion of acquisitions or joint ventures on the continent, spread across iron ore, nickel, and – hot on the heels of the Mopani purchase – consolidation of Zambian copper interests through the purchase of Vedanta’s Konkola Copper Mines.
An example of Qatar’s reach into African mining is the investment by its sovereign fund subsidiary, Qatar Mining Company, in Sudan’s copper and gold porphyry operations.
The Kingdom of Saudi Arabia, meanwhile, has been transparent about its grand scheme. Since 2022 it has hosted an annual Future Minerals Forum. The third gathering, held in January this year, clarified its “green metals” vision tied to a Saudi Arabia-led “establishment of ‘industrial hubs’ in an emerging minerals super region that stretches from Africa through the Middle East and into Central and East Asia.”
The Forum’s concept framework document details admirable sub-themes including the creation and retention of more local value in mining areas, the upliftment of human capital, gearing technological innovation, and instilling an environmental, social and governance (ESG) framework throughout the super-region.
Saudi Arabia, Qatar and the UAE back their investment holding companies and mining operation subsidiaries with enormous financial and political clout. IRH’s parent entity, International Holding Company (IHC), has assets of $240 billion and is chaired by the Emirate’s supreme ruler, Sheikh Mohamed bin Zayed Al Nahyan. Indeed, in the last decade the UAE has emerged as the 4th-largest foreign direct investor in Africa, after China, the EU, and the U.S. And the Saudi’s Public Investment Fund (PIF) sovereign corporate umbrella has almost one trillion U.S. dollars of assets under management, which it actively directs in pursuance of crown prince Mohammed bin Salman’s ‘Vision 2030’ economic diversification and growth strategy.
This corporate and visionary expansion needs to be understood in various contexts. Firstly, the Middle East’s Gulf rulers realise the global energy economy is transitioning. With less than 50 years’ reserves left, their nations need to reorient their economic growth trajectories by pivoting from oil and gas.
Strategically, what’s at play is securing not just a supply line, but the actual resources needed for diversification. The spree of mining deals by sovereign Saudi and UAE entities in Africa is a thrust towards securing critical metals and minerals to participate in the green energy switchover. And Africa’s importance is based not just on projected estimates, but on proven deposits and reserves. The Democratic Republic of the Congo (DRC), for instance, is currently the source of 70% of worldwide cobalt extractions; cobalt goes into the batteries in electronic devices that power the digital world, including the infrastructure for renewable energy applications.
Secondly, the future aside, Africa’s resources are needed for myriad purposes right now. Consider aluminium, the input for countless consumer goods, construction materials and industrial applications including the aeronautics industry. Aluminium is made from bauxite; Guinean mines occupy four of the top-10 list of producers, and Guinea has far-and-away the largest known bauxite reserves.
This is relevant because Saudi Arabia, the UAE and Qatar – apart from eyeing the alluring, future-focused commodities – also need the more basic metals and minerals as inputs to develop infrastructure, build housing and expand physical assets as they attempt to become a worldclass centre for industry, leisure and highly-skilled immigrants in a Fourth Industrial Revolution-led global economy.
Here, it’s informative to consider a different part of the Saudi’s Vision 2030. It includes a 26,500 km2 urban area encompassing a linear city, industrial complex, trade hub, tourist resorts and residential areas – a new city called Neom, to be developed over 25 years in what has been called the largest earthworks of all time. Work is currently stalled, partly due to the war in Gaza, and the scale may be under reconsideration as the PIF reprioritises its capital allocations. But the raw material requirements to create even a smaller version of an entirely new city are self-evident.
Giant mining corporations eye prizes
Thirdly, ambition and visions aside, the minerals and metals supply chain of the future and the emerging reality of Africa as a mining super-region are also being shaped by the mergers and acquisitions (M&A) ambitions of major mining conglomerates. The BHP Group Limited’s staggering $49 billion recent takeover bid for Anglo American, although ultimately unsuccessful, is instructive. One of the strategies motivating the bid was copper as the single most critical metal for the world’s transition to low-carbon electricity generation. “Unprecedented quantities of copper will be demanded over the next 25 years,” says S&P Global in a recent report. Mining conglomerates are paying attention.
BHP is currently the world’s third largest copper miner, and would have leapfrogged to first position had the takeover succeeded. Although only two African countries, the DRC and Zambia, are among the world’s ten leading copper producing nations, consolidation of the critical metal’s global supply is a clear incentive for mining houses.
This holds true for the diversity of metals and minerals throughout Africa. Overall, the continent has a third of the world’s mineral resources. But the ratio is higher for specific critical or valuable resources: for example, 35% of uranium reserves, half of the world’s gold, and 90% of global chromium and platinum reserves are in Africa.
A fourth context is what has been called “the rare metals war.” As the Brookings Institute notes, the emerging Gulf powers – and the West – need an alternative source to China for the 17 rare earth elements crucial to defence technologies, electronic products and the renewables sector. China’s share of rare earths’ production is currently at 60%, but Africa has had historically low levels of exploration, and this subsegment of the mining industry is ripe with opportunity.
Realistically, then, Africa’s mining industry is on the cusp of a giant leap. Its resources represent a hugely valuable strategic and economic lever. But to meet the demand for its metals and minerals Africa needs to extend existing mines, develop new sites, prospect for the future, and create the logistics hubs to get the materials to markets.
This is about capital, energy and logistics. The Arabian Gulf powers clearly tick the first two boxes: the likes of the PIF and IHC have huge capital assets, and the Gulf states hold about half of the world’s crude oil reserves. But, interestingly, they are also well positioned as logistics specialists. Dubai-based DP World and Abu-Dhabi’s AD Ports, for example, together operate twelve African port facilities, including in South Africa and the strategically vital, nominally independent Somaliland.
What’s in it for Africa?
What can we conclude from the blitz of corporate dealmaking, the data confirming the continent’s resource riches, the rise of the Gulf as an economic powerhouse with eyes on Africa? Not least, the investment inflows into Africa are welcome. Especially so if, as Gracelin Baskaran, mining economist at the Centre for Strategic and International Studies thinktank notes, Saudi Arabia’s path to natural resource-based economic prosperity is a template for African countries, and that – like other Arab Gulf sovereign fund investors – it is less skittish about “short-term market signals.”
But, in this confluence of change, Africa should have its own agenda: how to aggregate and leverage its own identity as a super-region and, more importantly, how to ensure that foreign entities – Arab Gulf sovereign vehicles or any other – boost domestic economies, in particular within local communities around the continent’s mining regions.
The reality is that Africa is already a mining super-region. But it needs more initiatives like the 2022 DRC-Zambia agreement – in this instance, to manufacture electric vehicle (EV) batteries – to forge regional ecosystem value chains.
So whether or not it’s called a super-region, it’s up to political and corporate leaders to make sure African citizens are not prejudiced like they were during the previous scramble for Africa.
This time, they must genuinely benefit from their birthright.
Is your company poised to capitalise on Africa’s rise as a mineral and metals super-region? To discuss further, contact me at lafras@iafrica.com