Mineral Processing in Africa — The Value Addition Gap

The Value Addition Gap

Africa is the world's most mineral-rich continent and simultaneously the least industrialised. The gap between these two realities — abundant raw materials leaving the continent with minimal processing, while manufactured products are imported at a premium — represents one of the defining structural challenges of African economic development. In the mining sector, this gap is stark: Africa accounts for approximately 30 percent of the world's mineral reserves but processes less than 5 percent of those minerals into refined or semi-finished products domestically.

The numbers tell a familiar story. The DRC produces over 70 percent of the world's cobalt and is the second-largest copper producer, yet the vast majority of its mineral output leaves the country as concentrate or intermediate products for processing in China, Europe, or elsewhere. Zambia, with nearly a century of copper mining history, processes a significant but still insufficient proportion of its copper domestically. South Africa, the continent's most industrialised economy, has seen its smelting and refining capacity stagnate or decline in several mineral categories. Across the continent, the pattern repeats: mines extract, trucks and trains haul raw or semi-processed material to ports, and ships carry it overseas for value addition that creates jobs, generates profits, and builds industrial capability in other countries.

The economic cost of this gap is enormous. A tonne of cobalt hydroxide exported from the DRC might be worth $15,000 to $25,000. That same tonne, processed into battery-grade cobalt sulphate, is worth $30,000 to $50,000. Further processed into cathode material and integrated into a battery cell, the value multiplies several times over. At each processing step, value is created — and at each step, that value is captured outside Africa. The African Development Bank has estimated that Africa loses tens of billions of dollars annually to the value addition gap in mining alone.

The gap is not merely economic. It is social and political. Processing industries create skilled employment — metallurgists, chemical engineers, process technicians, maintenance specialists — at wages significantly higher than those in mining. Processing plants generate demand for ancillary services, from reagent supply to equipment maintenance, that create additional employment and business opportunities. Countries that process their minerals develop industrial capabilities, technical education systems, and innovation ecosystems that contribute to broader economic diversification. Countries that export raw materials remain locked in a pattern of resource dependency that has characterised and constrained African development for over a century.

Smelting and Refining Capacity by Country

Africa's existing mineral processing capacity is unevenly distributed and generally insufficient relative to the continent's mining output. A country-by-country overview reveals both existing assets and significant gaps.

South Africa

South Africa has the continent's most diversified processing sector, with smelting and refining capacity for platinum group metals, gold, manganese, chrome, vanadium, and iron ore (steel). Anglo American Platinum and Impala Platinum operate large PGM smelters and refineries. The country has significant ferrochrome and ferromanganese smelting capacity. However, South Africa's processing sector has faced headwinds from chronic electricity shortages (Eskom load-shedding), high electricity costs, labour unrest, and regulatory uncertainty. Several smelters have been curtailed or closed in recent years due to power supply constraints.

Zambia

Zambia has more copper processing capacity than most African mining countries, reflecting its long mining heritage. The country operates several copper smelters and refineries, including the Chambishi smelter (Chinese-owned), the Mufulira smelter and refinery (Mopani, state-owned), and the Nkana smelter and refinery (KCM, under provisional liquidation). First Quantum Minerals operates the Kansanshi smelter. Total Zambian copper smelting capacity is approximately 800,000 to 1,000,000 tonnes per year, allowing the country to process a significant portion of its mine output domestically. However, capacity utilisation has been uneven, with several facilities operating below nameplate capacity due to feedstock constraints, power supply issues, or ownership disputes.

DRC

The DRC's processing landscape is evolving rapidly. For copper, the country has significant SX-EW capacity that produces finished copper cathode directly at mine sites — Tenke-Fungurume, Mutanda, and other operations produce cathode without requiring separate smelting. Kamoa-Kakula's new direct-to-blister flash smelter, commissioned in 2024, adds significant pyrometallurgical processing capacity. For cobalt, the DRC produces cobalt hydroxide at multiple facilities but has minimal capacity for battery-grade cobalt chemical production. The gap between hydroxide and battery-grade chemicals represents the primary value addition opportunity for the DRC's cobalt sector.

Morocco

Morocco has developed significant phosphate processing capacity through the state-owned OCP Group, which operates the world's largest phosphate fertilizer production complex at Jorf Lasfar. OCP has invested heavily in downstream processing, converting raw phosphate rock into fertilizers and phosphoric acid for export. Morocco's phosphate processing success is often cited as a model for other African countries seeking to add value to their mineral resources.

Other African Processing

Beyond these leading countries, African mineral processing capacity is sparse. Ghana operates a few gold refineries. Tanzania has limited gold refining capacity. Nigeria has some tin smelting operations. Madagascar has a nickel-cobalt processing facility (Ambatovy). But the overall picture is one of insufficient processing infrastructure relative to the continent's enormous mineral output.

Chinese Processing Dominance

The counterpart to Africa's processing deficit is China's processing surplus. China has systematically built the world's most comprehensive mineral processing infrastructure, absorbing raw and semi-processed materials from Africa and other mining regions and converting them into refined metals, chemicals, and manufactured products. Understanding this dynamic is essential to understanding the value addition gap.

China refines approximately 50 percent of the world's copper, 80 percent of its cobalt, 60 percent of its lithium, 70 percent of its graphite, and 90 percent of its rare earth elements. In virtually every category, China's processing share far exceeds its mining share, reflecting an industrial strategy that prioritises capturing the processing and manufacturing stages of the value chain where most economic value is created.

Chinese processing dominance was built through a combination of large-scale capital investment (often state-supported), competitive energy and labour costs, weak environmental enforcement (which has improved in recent years but remains less stringent than in Western countries), and strategic acquisition of upstream mining assets that secure feedstock supply. Chinese refineries process material from Chinese-owned mines in the DRC, Australia, Indonesia, and elsewhere, creating vertically integrated supply chains that are difficult for competitors to disrupt.

For African countries, the Chinese processing model presents both a challenge and an opportunity. The challenge is that Chinese companies have limited incentive to build processing capacity in Africa when their existing Chinese facilities are operational, depreciated, and integrated with downstream manufacturing customers. The opportunity is that Western efforts to diversify away from Chinese processing — driven by the IRA, EU Critical Raw Materials Act, and broader de-risking strategies — create potential demand for non-Chinese processing capacity, including in Africa.

African Value Addition Ambitions

African governments have increasingly articulated ambitions to process more of their mineral resources domestically. These ambitions are driven by the economic logic of value addition, the examples of successful processing countries, and a growing political narrative that raw material export represents a continuation of colonial-era extractive relationships.

The African Mining Vision

The African Union's Africa Mining Vision (AMV), adopted in 2009, provides the continental framework for mineral value addition. The AMV calls for a knowledge-driven African mining sector that is integrated into local and continental development, and it explicitly targets increased beneficiation and value addition as core objectives. While the AMV has influenced national mining policies across the continent, implementation has been slow and uneven, with most countries lacking the infrastructure, skills, and investment to achieve the AMV's processing goals.

DRC's Value Addition Push

The DRC government has been among the most vocal advocates for in-country mineral processing. The 2018 Mining Code's classification of cobalt as a strategic substance, with higher royalty rates, was partly intended to incentivise domestic processing. Government officials have repeatedly called for export restrictions on unprocessed minerals, and a 2021 decree required cobalt to be processed to at least hydroxide form before export. President Tshisekedi has spoken about the ambition to produce battery-grade chemicals and even battery components within the DRC, though the infrastructure and investment gaps remain enormous.

Zambia's Processing Strategy

The Zambian government, under President Hichilema, has made value addition a complement to its 3-million-tonne copper production target. Zambia already has significant copper smelting capacity and aims to expand it alongside mining growth. The government has engaged with potential investors in copper refining, cobalt processing, and battery material manufacturing, positioning Zambia as a processing hub that can serve both African and international markets. Zambia's relatively stable governance, mining heritage, and strategic location along the Lobito Corridor route are presented as comparative advantages for processing investment.

Indonesia's Example

The example most frequently cited by African policymakers is Indonesia's nickel export ban. In 2020, Indonesia banned the export of raw nickel ore, forcing mining companies to build domestic processing capacity. The policy was controversial and caused significant short-term disruption, but it succeeded in attracting massive investment in Indonesian nickel smelting and, subsequently, in battery material manufacturing. Chinese companies, led by Tsingshan and its partners, invested billions of dollars in Indonesian nickel processing complexes. Whether the Indonesian model can be replicated in the DRC or other African mining countries is debated, but the example has emboldened policymakers who see export restrictions as a lever for industrialisation.

Policy Instruments — Export Bans and Incentives

African governments have deployed a range of policy instruments to promote domestic mineral processing, with varying degrees of success and controversy.

Export Bans and Restrictions

The most direct instrument is restricting or banning the export of unprocessed minerals. The DRC's requirement for cobalt hydroxide processing before export is one example. Tanzania implemented an export ban on mineral concentrates in 2017, though enforcement has been inconsistent. Zimbabwe has imposed restrictions on raw lithium exports. These policies aim to force companies to build processing capacity domestically by denying them the option of exporting raw materials.

The risk of export restrictions is that they may deter rather than attract investment. If mining companies face higher costs to process domestically (due to power supply, infrastructure, and skills constraints) than to export for processing elsewhere, they may reduce investment in new mining capacity rather than invest in domestic processing. The policy works only when the combination of the resource's desirability, the regulatory requirement, and the availability of supporting infrastructure makes domestic processing commercially viable. Indonesia succeeded because its nickel deposits were essential for global battery supply chains and because Chinese investors were willing to build processing infrastructure rapidly. Whether the same conditions apply in the DRC or other African countries is uncertain.

Special Economic Zones

Several African countries have established or proposed special economic zones (SEZs) with incentives for mineral processing investment. These incentives may include reduced corporate tax rates, import duty exemptions on processing equipment, streamlined permitting, and dedicated infrastructure (power, water, transport). The DRC has designated several SEZs in the Katanga region. Zambia's Multi-Facility Economic Zones (MFEZs) include the Chambishi MFEZ, which hosts Chinese-owned copper smelting operations. The effectiveness of SEZs depends on the quality of their infrastructure, the reliability of incentives, and the broader business environment.

Fiscal Incentives

Tax incentives for processing investment — accelerated depreciation, investment tax credits, reduced royalty rates for processed versus raw exports — can improve the economics of domestic processing. Zambia and the DRC have both used fiscal instruments to encourage processing, though the effectiveness has been limited by the magnitude of the infrastructure gaps that make African processing more expensive than alternatives in China or elsewhere.

Strategic Partnerships

Bilateral agreements between African mining countries and consuming nations can facilitate processing investment. The US-DRC and US-Zambia minerals agreements, the EU-Africa strategic partnerships, and the G7 PGII framework all include provisions for processing and value addition. These partnerships can mobilise development finance, provide technical assistance, and create guaranteed offtake arrangements that reduce investment risk for processing projects.

Corridor SEZ Processing Plans

The Lobito Corridor development programme includes explicit provisions for mineral processing along the corridor route. The vision is to transform the corridor from a simple transport route into an industrial corridor — a linear zone of mining, processing, manufacturing, and logistics activity that captures value at multiple stages of the mineral supply chain.

Planned Processing Zones

The corridor development plan identifies several potential locations for processing facilities and special economic zones. These include sites in the DRC's Haut-Katanga and Lualaba provinces (close to major mining operations), locations in Zambia's Copperbelt and Northwestern Province, and potential processing zones in Angola near the port of Lobito. The specific configuration of processing along the corridor will depend on power availability, water access, transport connectivity, and the commercial decisions of mining companies and industrial investors.

Copper Processing Opportunities

For copper, the corridor offers opportunities to increase smelting and refining capacity close to mining operations. While the DRC already has significant SX-EW capacity for oxide ores, the growing proportion of sulphide ore production (particularly from Kamoa-Kakula) requires smelting. Additional smelting capacity along the corridor could process concentrate from multiple mines, reducing the volume of concentrate shipped overseas for processing. The refined copper cathode or anode produced could be exported directly through the Lobito port to European and American markets.

Cobalt Processing Opportunities

The most transformative processing opportunity along the corridor is in cobalt. Building battery-grade cobalt sulphate production capacity along the corridor would capture the highest-value processing step currently monopolised by Chinese refiners. A corridor-based cobalt refinery producing IRA-compliant battery-grade chemicals for export to European and American cathode manufacturers would represent a direct alternative to the current Chinese-dominated supply chain. The strategic alignment between Western supply chain policy (IRA, EU CRM Act), DRC value addition ambitions, and commercial demand for non-Chinese cobalt chemicals makes this one of the most compelling use cases for corridor-based processing.

Power Supply — The Critical Enabler

Mineral processing is energy-intensive, and the availability of reliable, affordable power is the single most important determinant of whether corridor-based processing can be commercially viable. The DRC's hydroelectric potential — anchored by the existing Inga I and Inga II complexes and the proposed Grand Inga project — is enormous but largely undeveloped. In the interim, solar and small hydro projects along the corridor route could provide power for processing facilities. Angola's energy sector, which includes significant hydroelectric capacity, could also supply corridor-based processing operations near the Atlantic coast.

The Commercial Case

The commercial case for corridor-based processing rests on three pillars. First, proximity to feedstock: locating processing near mines eliminates the cost and risk of shipping raw materials thousands of kilometres to processing facilities elsewhere. Second, market access: the corridor provides a direct logistics link to European and American markets where demand for non-Chinese processed minerals is growing rapidly, driven by the IRA and EU regulations. Third, cost competitiveness: if power supply, labour, and regulatory conditions are favourable, African processing can potentially compete with Chinese facilities on cost, particularly given the growing environmental and carbon border adjustment costs that may apply to Chinese-processed materials exported to Western markets.

The value addition gap in African mining is not a law of nature. It is the product of historical patterns, infrastructure deficits, and policy choices that can be changed. The Lobito Corridor represents the most significant opportunity in a generation to begin closing that gap — not through rhetoric about industrialisation but through the physical infrastructure, commercial relationships, and strategic alignment that make processing investment commercially viable. The corridor's success will be measured not just in tonnes of minerals transported but in the value captured, the jobs created, and the industrial capabilities built along its route.