Global markets want Africa’s critical minerals for clean energy. Lithium, copper, and manganese are in high demand. Bauxite is also needed for advanced technologies. However, funding for mineral processing and manufacturing on the continent is scarce. This is a major contradiction for Africa’s role in the energy transition. The financial system helps extract raw materials but does little to increase value for African countries. Financing must become a central part of the ‘just transition’ discussion.
Africa provides significant amounts of minerals for clean energy supply chains. Yet, it captures only a small fraction of the profits from manufacturing clean energy products. If Africa only supplies ores and concentrates, while others do the processing and manufacturing, the energy transition won't be fair for the continent. This financing gap is evident across Africa’s energy sector. African nations receive a small portion of global energy investments. Clean energy spending is even lower. The cost of borrowing for energy projects in Africa is much higher than in rich countries or China. This difficulty impacts critical minerals. Adding value requires more than just mines. It needs reliable electricity, good transport, water, and skilled workers. It also needs patient, long-term finance that can manage initial risks.
Ghana is a clear example of both opportunity and funding challenges. The country aims to build a full bauxite-to-aluminium industry. Ghana has high-quality bauxite. It also has an aluminium smelter, VALCO. The government wants to keep more value within the country. Studies show an integrated aluminium industry could create more jobs and boost the economy more than just mining. However, successful industrialisation depends on affordable electricity. Long-term power supply deals are crucial. Major rail investments are also needed. Access to ports and huge upfront capital are essential. The missing piece is not ambition. It is industrial finance that is attractive to banks and is on the right terms. This is a lesson for all of Africa.
Ghana’s aluminium plans show value addition is not an afterthought. It is a complex industrial project. Problems like high electricity costs or poor transport make refineries uncompetitive from the start. The Natural Resource Governance Institute (NRGI) noted Ghana’s aluminium ambitions could use almost all its hydropower. New, cheaper electricity sources are necessary. Private investors alone are unlikely to fix these systemic issues. Ghana’s lithium discussions show a similar problem. Many Ghanaians want domestic lithium refining. They wish to avoid repeating the pattern of exporting raw materials and importing finished goods. Yet, recent analysis by NRGI indicates that a lithium refinery built soon would face challenges. It would have limited raw materials. Its costs would be higher than competitors, especially in China. Demand outside China is uncertain.
One economic model suggests Ghana could earn GHS 2.8 billion (USD 500 million) less from its lithium reserves. This would happen if it refines lithium domestically instead of exporting concentrate. The refinery would likely create fewer than 200 direct jobs. This finding doesn't argue against value addition. It argues against forcing it without the right financing and market conditions. Ghana’s lithium case warns that flawed financing can turn a popular idea into a financial burden. NRGI's models show a refinery paying market prices for feedstock would lose money. If it pays below-market prices, the government subsidises it through lower mining revenue. The state might offer grants, cheap loans, discounted energy, or direct ownership. This would shift risk to public finances. Financial governance is as important as the amount of money involved. Ghana’s Ewoyaa lithium agreement includes efforts for a stronger state stake. It has a 10 percent royalty and a 35 percent corporate tax rate. It includes free carried state interest, additional paid equity, and a community contribution. However, when global prices fall, companies often seek concessions. This is happening in discussions about Ewoyaa. The main lesson is that governments should not always adjust mining agreements without careful consideration of long-term financial impacts.