By Dr. Israel Ovirih
The world today is transitioning exponentially into the net-zero emission era, with a focus on renewable and green energy, sustainable digital revolution, aerospace and space exploration, national defense, global peace and advanced manufacturing.
Global Transitioning and Global Realities
The developed economies of the West and East, including Europe, Russia, China and the rest of Asia, are gradually jettisoning black oil for a handful of metals and commodities which are now positioned to power our homes, factories, defense systems and indeed the entire planet. Whosoever owns or possesses, processes and controls these scarce metals will not only earn the billions, but also have the potentials to control the entire world!
It is estimated that an annual market for these energy transition, high-tech manufacturing, aviation and national defense metals (globally referred to as critical minerals) is in excess of $1.0 trillion! These critical minerals, identified to be about fifty (50) by the US Geological Surveys (USGS) report and thirty (30) by the European Commission include, but are not limited to, graphite, lithium, manganese, phosphate, nickel, tin, copper, zinc, tantalum, zirconium, tungsten and other rare earth metals mainly found in the Global South, Sub-Sahara Africa and Nigeria. This explains why, under the Build Back Better Plan of President Biden, the US is expected to expend over $3.0 trillion to revamp America’s infrastructure. The Infrastructure and Jobs Act, the Inflation Reduction Act and the American Chips and Science Act alone provided over $900.0 billion as grants, soft loans and policy spendings expended on the sourcing of critical minerals, EV chargers, solar and wind energy and, more importantly, to assure unhindered global supply of critical minerals.
The European Union Critical Minerals Act of 2022, passed after the Covid-19, was aimed at guaranteeing the EU’s access to a secured, diversified and affordable critical raw materials base to feed its industries, with billions of euros voted to enable the attainment of its climate and digital objectives. The Australasian as well as the Chinese government also voted and lent billions of their currencies to further emphasize the criticality of these metals to our world, as we approach the 2050 target year.
A Deloitte report quoting the International Energy Agency (IEA) succinctly clarifies this reality. Global economies transitioning from fossil fuel to net-zero by 2050 could lead to a six-fold increase in the demand for critical minerals from 7.1 million tons (MT) to 42.3 million MT. This offers tremendous opportunities for nations with mineral, mining, exploration and processing capabilities (including Nigeria and others within the global critical minerals value chain). To meet this inevitable surge in demand, miners need to invest an unprecedented amount of capital in a short space of time. According to estimates, close to two trillion dollars is needed to supply key energy transition metals alone, by 2035. This is aside the metals for IT, aerospace, defense and advanced manufacturing. Miners looking for the necessary finance are likely to turn to global financial markets.
President Bola Tinubu, since assumption of office in May 2023, has shown significant commitment to the global issues of energy transition, net-zero emission and green energy, digitalization, poverty reduction, food security and global peace. The President’s unflinching commitments and conversations towards the diversification of the Nigerian economy from oil to non-oil exports, enhancing national revenue, attracting foreign investments and increasing foreign exchange earnings are no news to all of us.
Revamping our economy by increasing foreign exchange earnings (especially from non-oil exports) from $4.5 billion in the year 2022 to over $25.0 billion annually (say from 2024 upwards) is easily realizable, if we focus on the exploration and exploitation of our vast critical minerals endowments. This possibility becomes real, if we can surmount the challenges of geoscience, limited policy financing, limited access to global capital and crude and unstructured approaches to mining by our local operators. I am glad that Nigeria’s solid minerals and finance ministers (Dele Alake and Wale Edun) seem geared-up and fired-up, as we collaborate on converting these potentials to possibilities.
Core Challenges and the Tinubu Initiative
One of the core challenges affecting the growth of the critical minerals sector in Sub-Sahara Africa and, indeed the global south, remains the right type of funding and a limited access to global capital. These challenges require global and multilateral collaborations, thus underlining the importance of a Global Funding Initiative (GFI) aimed at the global south.
As the President of the Federal Republic adopts the initiative and compels Nigeria to lead same, the possibilities for the development of and/or explosion in junior mining houses in the Global South become real. The Global South, including Nigeria, is thereby positioned to bridge the gaps in the supply chain of critical minerals, which is estimated by the International Energy Agency (IEA) to be in excess of $500.0 billion by 2025.
President Tinubu’s kineticism and initiative will no doubt help national governments and businesses in the south to re-set policy directions in the solid minerals sector and offer the right type of advisory and funding support necessary to rapidly develop a plethora of targeted critical mineral projects, as well as infrastructure. This will enable the attainment of the quad-objectives of economic prosperity, national security, a net-zero world and sustainable digital revolution.
The instrumentality will enable access to global capital on a sustainable basis, while project development in that area will open up new discoveries, integrate them into the financial markets and subsequently turn them into producing assets and processing for the new world (with its attendant multiplier effects on those economies).
Of a truth, as a player in the finance sector and an investor in the African critical mineral space, it becomes more obvious to me on a daily basis, that until we build, integrate and onboard our mines and mineral assets into the global financial markets, our labor might just be in vain.
The initiative by President Tinubu will propel the development of and/or explosion in the form of growing numbers of junior houses in the Global South to fill the present gap. This gap may grow bigger as the world races to the target year of 2050.
In addition, the initiative will deliver mining infrastructure; power and dams; railways; sea and river ports; warehousing; access roads and bridges among others, which will not only be beneficial to the mines, but also the communities, adjoining towns, provinces and regions. This is a huge transformation for countries and economies in the Global South!
The initiative, no doubt, will benefit operators, from discovery to delivery, including producers and processors. The various beneficiaries of the initiative, including critical mineral countries, will benefit from its contribution to GDP, royalties to national governments and an exponential increase in revenue. Again, millions of jobs (direct and indirect) will be created, alongside an increase in foreign exchange inflows to critical mineral producing countries.
Dr. Israel Ovirih, an Investment Banker, is Convener, Africa Critical Minerals Roundtable (ACMR)
Dr. Ovirih is a Valedictorian, Economist and Investment Banker with over 30 years experiences in the Nigerian banking sector. He is the Chairman/CEO of Banklink Africa Group, a group active in proprietary investments and has invested in banking, oil and gas, mining and natural resource sectors across Sub-Saharan Africa. Dr. Israel has helped Nigerian companies raise over $1.5 billion to support the Nigerian local content policy in the oil and gas, maritime and shipping sectors leveraging on his creative financial engineering skills, local competencies and global network.
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