The report offers a comprehensive analysis of the complexities associated with foreign investments in the mining sector in low-income countries, with a particular emphasis on Sub-Saharan Africa. It examines challenges and opportunities related to power supply, infrastructure development, community engagement, and regulatory frameworks, while proposing a MEND (Mineral-Electricity Nexus for Development) approach framework to address these multifaceted issues. Led by Wei Shen and Zhengyun Zhou from IIGF, along with Prof. Tsitsi Musasike from Boston University and Dr. Tinotenda Chidhawu from the University of the Western Cape and the University of Zimbabwe, the research aims to provide insights into sustainable energy supply for critical mining activities in Africa. This report was commissioned by the African Climate Foundation (ACF) which we gratefully acknowledge. It was produced independently by IIGF and the contents represent the views of IIGF and its researchers and not necessarily that of the ACF.
Below are several salient points extracted from the report:
- The rising demand for transition minerals in Africa presents significant opportunities and challenges, necessitating well-governed foreign investments in the mining sector for both national economic advancement and equitable local development.
- The Mineral-Electricity Nexus for Development (MEND) approach is developed as an analytical framework to address electricity supply challenges and other infrastructure gaps hindering the realization of national and local benefits from mining investments by fostering collaborative governance among multiple stakeholders.
- The success of the MEND approach in a specific national context is gauged by its achievement of four key developmental benefits: local electrification, climate mitigation through renewable energy deployment, enhanced power infrastructures, and redistributive revenues for long-term sectoral development and governance.
- An in-depth case study of the Z1 lithium mining project in Zimbabwe, conducted within the MEND framework, highlights the country’s abundant transition mineral resources but chronic power supply shortages and infrastructure limitations, jeopardizing the government’s goals of enhancing processing capacity and value addition in mining activities.
- Chinese investments have dominated Zimbabwe’s mining and electricity sectors over the past two decades, with our investigation revealing insights into the impacts of current corporate strategies and practices on power solutions for Chinese mining investments in Africa.
- Innovative power solutions, including a sleeved-PPA arrangement and plans for a solar PV plant, were implemented for the Z1 project to offer reliable and affordable power, although their impact on local electrification is limited, prompting the Chinese investor to undertake additional CSR efforts to address local energy poverty.
- A coordinated approach involving public, private, and civil actors is necessary to achieve a more inclusive and sustainable power solution for mining facilities and surrounding communities, as individual investors lack the capacity to fulfill all four pillars of MEND without additional support from various stakeholders.
- Support from state utilities, civil society organizations, Chinese policy banks, and development financiers is essential for implementing MEND, requiring supportive policies from both the Chinese and Zimbabwean governments to prevent further resource curses.
- The success of MEND hinges entirely on the cash flow from selling preliminarily processed minerals, underscoring the need to rethink resource-infrastructure development and financing in Africa, particularly contrasting with previous Chinese models focused on limited revenue generation contributions to mega infrastructure projects.