African minerals processing push faces power supply risk

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African mineral processing risks

Highlights

Guinea, now the world's largest bauxite exporter, is building three alumina refineries and aims for five by 2030 with 7–8 million tons annual capacity.
Severe electricity shortages threaten Africa's mineral processing expansion, as Guinea needs 5,000–10,000 MW to support planned industrialisation versus current 1,000 MW output.
South Africa's ferrochrome sector exemplifies risks, with power costs up tenfold since 2008 and fewer than 12 of 66 smelters operational, impacting competitiveness despite vast chrome reserves.

Processing plans expand as governments court investors

As reported by Reuters, countries across Africa are using export restrictions, tax incentives and access to mineral deposits to encourage more domestic processing, from Guinea's bauxite sector to Zimbabwe's lithium industry. Backers including the U.S. International Development Finance Corporation and Africa Finance Corporation are supporting African processing projects and planning further involvement.

Guinea is among the most aggressive examples of this strategy after recently overtaking Australia as the world's largest bauxite producer and exporter, with most shipments going to China. Daouda Diakite, senior adviser to Guinea's mines minister, says three alumina refineries are under construction and the government wants five by 2030 with combined annual capacity of about 7 million to 8 million tons, before moving on to aluminium smelter investments.

Guinea is not following Indonesia's model of banning unprocessed nickel exports to force domestic investment. Instead, it says it wants to limit bauxite export volumes to avoid oversupplying the market and depressing prices, though the curbs are not yet in place. Diakite says investors seeking bauxite are also being directed toward smelter or railway investment, with mining rights and some tax holidays offered as incentives, while ore pellet plant development is also being fast-tracked ahead of eventual steel production.

Energy shortages threaten industrialisation economics

Despite investor interest, officials say electricity remains the main constraint on the continent's value-add ambitions. Diakite says Guinea produces about 1,000 megawatts, mostly from hydropower, and exports electricity to Senegal, Gambia and Guinea-Bissau during the rainy season from April or May to November, but imports power from Ivory Coast or Senegal in dry months.

He says Guinea needs 5,000 MW to 10,000 MW to support industrialisation, including planned aluminium smelters, and is seeking investment in economically viable energy options including gas, coal and nuclear. Although Guinea has no coal reserves, he suggests ships arriving empty to load bauxite could collect coal in South Africa or Mozambique on the way.

South Africa's ferrochrome and steel processing decline illustrates the commercial risks when electricity is costly or unreliable. Dozens of smelters have shut in recent years, largely because power costs have risen roughly tenfold since 2008, leaving fewer than a dozen of the country's 66 ferrochrome smelters operating. Minerals Council South Africa CEO Mzila Mthenjane says reliable, affordable energy is the main lesson for industrialisation, as high power costs have made South African ferroalloys uncompetitive against China, even though South Africa holds more than 70% of known global chrome reserves.

Elsewhere, South32 placed its Mozambique aluminium plant on care and maintenance this year after drought disrupted power supply. Mohamed Zada, Egypt's deputy minister for strategic industries, says investors focus on four linked pillars, feedstock, power, stable policy and committed buyers, while Africa Finance Corporation mining head Franklin Edochie adds that access to capital is also critical because value-added mineral projects typically require multibillion-dollar investment.

Our earlier article on Pakistan’s proposed Port Qasim aluminium smelter examined an export-focused project targeting more than $5 billion a year in shipments at full scale and the dedicated power-supply structure meant to support it. It also detailed how the plan is tied to a conditional settlement of the late payment interest dispute between CPPA-G and PQEPCL, with approvals and payments required by October 31, 2026 and an intended effectiveness date of November 30, 2028.

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