Companies that delayed investment or focused on short-term shareholder returns are now facing steep premiums to secure producing assets, underscoring the cost of inaction in a resource-constrained environment.
By Tinyiko Mahange and Craig Brewer
The African mining industry faces a defining moment.
The demand for critical minerals such as copper, lithium, nickel, and rare earths continues to surge as economies pivot toward decarbonisation and renewable energy sources.
These materials form the backbone of technologies like electric vehicles, wind turbines, and energy storage solutions.
For Africa, home to some of the largest reserves of these minerals, this presents both an opportunity and a challenge.
How resources are developed, and where capital is allocated, will determine whether the continent becomes a leader in the global energy transition or misses the moment.
This is especially significant as new role players enter the fold.
Sovereign wealth funds and state-backed entities from regions such as the Middle East and China are increasingly shaping the competitive landscape.
With vast pools of patient capital, these entities are securing key mineral assets across Africa, often ahead of conventional mining companies. China, for example, has invested heavily in Africa’s resource sector, leveraging its Belt and Road Initiative to establish partnerships in regions rich in critical minerals. Its dominance in rare earths, processing over 90% of the global supply, is a testament to its long-term approach.
Similarly, Middle Eastern investors are using their financial muscle to gain strategic footholds. Saudi Arabia’s Public Investment Fund, through its joint venture Manara Minerals, is pursuing equity stakes in critical mineral assets worldwide, with billions of dollars earmarked for acquisitions.
As these new, non-traditional players disrupt established norms in the resource sector, the interplay between capital allocation and resource strategy becomes increasingly pivotal—an interplay exemplified by the shifting fortunes within the copper market.
As demand for the metal continues to grow, early movers that invested in greenfield exploration and development projects are now seeing significant returns on their investments.
These projects, while requiring substantial upfront capital and long lead times, are yielding rewards that highlight the value of foresight and patience.
In contrast, companies that delayed investment or focused on short-term shareholder returns are now facing steep premiums to secure producing assets, underscoring the cost of inaction in a resource-constrained environment.
The lessons from copper are broadly applicable across the mining sector: long-term strategic thinking is critical to building resilience and maintaining competitiveness.
While copper provides a compelling example, the broader question for the mining sector is how to anticipate and prepare for the next wave of critical minerals.
Demand for materials like rare earths, cobalt, and hydrogen-related minerals is already rising, driven by advances in energy storage, electric vehicles, and decarbonisation technologies.
The ability to identify and develop these future growth vectors will separate industry leaders from laggards. The role of partnerships will become even more critical in this context.
Collaboration between mining companies, sovereign wealth funds, and downstream manufacturers will be essential to funding capital-intensive projects and securing supply chains. African governments and companies must also focus on building the infrastructure, workforce skills, and governance frameworks needed to support long-term growth.
A Framework for Future-Proofing Africa’s Mining Sector
To better capitalise on emerging opportunities in the region, African mining companies must also adopt a future-proof approach to resource development.
This means ensuring that capital allocation prioritises long-term resilience, sustainability, and shared prosperity. Governments and mining companies need to create environments that attract visionary investors, strengthen governance practices, and promote equitable benefit-sharing frameworks.
Sustainability must be central to these efforts. Investors are increasingly demanding adherence to environmental, social, and governance (ESG) principles, recognising their role in mitigating risks and ensuring project longevity. Mining projects that integrate ESG considerations are not only more likely to secure investment but also to build stronger relationships with local communities and stakeholders.
Partnerships that focus on local beneficiation, for instance, can reduce reliance on external supply chains and ensure that African economies retain more of the value generated by their resources.
The energy transition offers an opportunity to redefine the mining sector, however, this requires bold, proactive decision-making. For companies, the challenge is to allocate capital efficiently, balancing the need for near-term returns with investments that secure long-term resilience.
For governments, the priority is to create an enabling environment that attracts sustainable investment and ensures that the benefits of resource wealth are broadly shared.
The question is not whether capital allocation will shape the future of mining – it is how. Will it reward those with vision and patience, or will it continue to favour short-term strategies at the expense of long-term competitiveness? The companies and governments that rise to this challenge today will not only secure their place in the global energy transition but also set a benchmark for sustainability, innovation, and shared prosperity into the future.
Tinyiko Mahange, Director, Investment Banking and Craig Brewer, Managing Director: Co-Head Origination, Investment Banking at Absa CIB
BUSINESS REPORT