African mining in 2025: Resource nationalism and global investment

The industry is continually challenged by unpredictable swings in global commodity prices and uncertain policy frameworks – fluctuating prices of key minerals like gold, copper, cobalt, and crude oil, threaten to destabilise economies, deter investment, and slow down regional development. Coupled with the backdrop of unpredictable government policies and actions, this presents a multifaceted challenge for mining companies to navigate.

However, Africa's mineral wealth is unparalleled. South Africa, Ghana, Botswana, and the Democratic Republic of Congo (DRC) contain vast deposits of copper, gold, diamonds, platinum and cobalt. These resources are the backbone of export revenues and local economies that drive job creation and infrastructure development. Yet these mineral-rich reserves are besieged by demand-supply mismatches, currency fluctuations, geopolitical risks, infrastructure and logistical challenges, energy crises and political instability.

Turbulent markets: The challenge of commodity price volatility

The future prices of commodities such as cobalt, manganese, copper and nickel are inextricably linked to their roles in industrial processes and the energy transition.

Cobalt, indispensable for lithium-ion batteries in electric vehicles (EVs), is a prime example of price volatility driven by overdependence on the DRC, which is grappling with widespread civil unrest, and sustainability issues. While alternative battery chemistries may reduce required cobalt content, the near-term demand remains strong.

Manganese, primarily used in steelmaking, is now catching the eye of battery manufacturers, particularly for Nickel- Manganese-Cobalt (NMC) batteries in EVs.

Copper, essential for electrical infrastructure and renewable energy systems, is in high demand due to urbanisation and cleaner energy technologies. However, supply constraints from major producers like Chile and Peru add to the price volatility.

Nickel, crucial for stainless steel and high-performance alloys, faces price instability due to geopolitical risks in key producing countries like Indonesia and the Philippines.

Volatile commodity prices create problems for mining firms in Africa, leading to unstable revenues, profit erosion and forecasting difficulties. This unpredictability reverberates through the broader economy, as seen in Nigeria's economic collapse following the 2020 oil price crash. Price volatility also creates a hostile investment environment, causing project delays or cancellations, destabilising regional economies, and triggering inflation and currency depreciation. The resulting uncertainty makes it difficult for companies to plan long-term investments, further exacerbating economic instability. This volatility can increase borrowing costs and reduce access to capital, making it even harder for mining firms to sustain operations and invest in new projects.

“In an era where commodity price volatility is here to stay, valuation experts should consider the strengths and weaknesses of traded futures prices and consensus price forecasts on a case-by-case basis, considering factors such as the liquidity of longer-term traded futures prices and the ability of commodity price analysts to react quickly to sudden changes in supply or demand.”

 Paul Cliff, Partner, Contentious Valuations

Legal and regulatory turbulence: The political minefield

Political upheavals across Africa add another layer of uncertainty. Recent regime changes often bring radical shifts in policy, mining regulations, tax systems and ownership requirements. These changes, while aimed at enhancing national benefits through resource nationalism, can potentially disrupt existing agreements and deter foreign investors. This situation underscores the precarious balance between pursuing national interests and maintaining a stable, attractive investment climate.

“These actions, while aimed at addressing past wrongs, create a climate of uncertainty that is detrimental to the sector. Stability and transparency in the regulatory environment are crucial for ensuring sustainable growth and development in the mining industry."

Amaechi Nsofor, Partner, Head of Africa Business Group

Grant Thornton's extensive local market knowledge, combined with a strong global footprint, positions us to help mining companies navigate the complexities of the African market. By leveraging our expertise, we aim to support the African mining industry in building resilience and contributing sustainably to economic development and growth.