The creation of a minerals “superregion” comprising Africa, the Middle East, Central Asia and South Asia will make a major contribution to the success of the energy transition, according to a new white paper published by Wood Mackenzie at the Future Minerals Forum in Riyadh.
White Paper How Can Super Regions Enable the Energy Transition? This book, written in collaboration with the Future Minerals Forum, provides a blueprint for how super regions can become global forces in the production of minerals and related clean energy technologies.
Wood Mackenzie estimates that approximately US$400 billion in capital expenditure will be needed to extract, refine and smelt critical minerals by 2030 to close the gap between supply and demand and limit global temperature rise to 1.5°C above pre-industrial levels.
Map of the proposed mineral superregion
Source: Wood Mackenzie
“The creation of a mineral superregion provides a unique opportunity for countries in the region to collaborate and leverage existing resources and expertise,” said Julian Kettle, senior vice president of research at Wood Mackenzie, co-author of the white paper. “The region has the potential to become a world leader in mineral production and related clean energy technologies, challenging China’s dominance in the energy transition ecosystem.”
The white paper adds that unlocking the potential of a superregion requires integrating four key variables: resources, capital, demand and capacity.
“If super-regions can work together across all four variables, they can become formidable metals and mining powers that drive energy transition and economic development,” Kettle says.
Africa has unparalleled mineral resources
The White Paper states that Africa is a clear world leader when it comes to the minerals essential to a successful energy transition. With 79% of the world’s cobalt reserves, 44% of the world’s manganese and 21% of the world’s graphite, as well as significant resources of many other minerals including copper and tin, the continent’s potential is unparalleled.
However, Africa’s immature financial ecosystem, undeveloped infrastructure and reluctance to invest in many African countries means the continent faces strong headwinds.
Middle East provides funds and experience
The White Paper says the Middle East could play a pivotal role in the creation and long-term success of a super-region and could provide solutions to some of Africa’s problems. The region is home to sovereign wealth funds that manage trillions of dollars and have extensive experience in overseas investments in physical infrastructure and, in some cases, mining. This expertise can be leveraged to invest in mineral supply chains domestically and across super-regions.
Along with sub-Saharan Africa, this region is also one of the most naturally endowed regions for solar power generation.
However, the report adds that although the Middle East has access to capital and mineral resources, it lacks significant reserves and production.
“The Middle East currently produces 35 percent of the world’s oil, but it does not produce any meaningful amounts of cobalt, nickel, lithium or graphite,” Sam says.
South Asia has huge demand potential
South Asia does not have the economic clout of the Middle East or the rich natural resources of Africa, but as the world’s most populous region, it has great potential as a super-regional demand and manufacturing center.
The white paper states that India plans to add 152 gigawatts (GW) of solar capacity by 2020, and sales of battery electric vehicles (EVs) and plug-in hybrid electric vehicles in India could also reach more than 19 million units by 2050, driving significant growth in mineral demand.
“South Asia’s competitive workforce, low capital costs and access to ports, along with its emergence as a demand center, make it a logical destination for midstream and downstream operations in the mineral supply chain,” Kettle concludes.
Editor’s note
“How can superregions enable the energy transition?” was written in collaboration with the Future Minerals Forum. Click here to read the full white paper. The Future Minerals Forum will be held in Riyadh on January 10-11. Click here for more information.
