The global shift towards clean energy technologies has sparked an increase in demand for vital minerals, particularly nickel, which enhances the performance, longevity and energy density of Electric Vehicles (EV) and energy storage solutions.
Africa, with its substantial nickel reserves and attractive policies, represents a promising region for mining companies seeking a stable and long-term supply of this critical mineral.
Abundant Reserves and Production Capacity
Africa’s vast nickel deposits have made the continent a top investment destination for global mining companies. Countries such as South Africa, Zimbabwe, Tanzania, Madagascar, Zambia and the Ivory Coast offer substantial deposits of the mineral, and are set to play a central role in global supply chains in the near-future. GlobalData estimates that out of the 186 nickel mines in operation globally, South Africa is home to 127. Yet, Africa’s total nickel reserves remain undetermined, opening up lucrative opportunities for mineral explorers and producers alike.
What’s more, Africa’s capacity and proven success of developing large-scale nickel mines serves as an attractive feature for investors. Projects such as the Enterprise Mine in Zambia – representing the biggest in Africa – as well as the Kabanga Nickel project in Tanzania and the Zeb Nickel Project in South Africa have strengthened Africa’s attractiveness as a nickel mining market.
Growing Global Demand
The rising demand for nickel, particularly in the United States (U.S.) and Europe, has positioned Africa as a strategic market. Demand is largely driven by efforts to accelerate the uptake of renewable energy technologies, battery storage solutions and EVs, coupled with a push to diversify global supply chains.
In April 2023, for example, U.S. Vice President Kamala Harris announced the development of a critical minerals processing facility in Tanzania, backed by U.S. funding. The U.S. government, through the Partnership for Global Infrastructure and Investment and TechMet, will invest in the development of the 44 million ton-Kabanga Nickel Project to meet U.S. nickel demand.
Additionally, Canadian mining firm Ivanhoe Mines – through its South African subsidiary Ivanplats – is fast-tracking the development of the Platreef Platinum Mine in South Africa with the aim to start operations in 2024. The mine represents one of world’s largest, low-cost nickel developments. As global interest in African nickel intensifies, a wave of developments are poised to take off.
Attractive Government Policies
An increasing number of African countries have set ambitious economic growth targets and are prioritizing boosting the nickel mining industry for gross domestic product growth, revenue generation and employment creation. As a result, government policies on mining are being revitalized to attract foreign direct investments and, in the process, contribute heavily towards the growth and attractiveness of nickel mining operations across Africa. For instance, the Zimbabwean government is directly negotiating mining terms with willing investors as the country seeks to make the mining industry a $12 billion market by 2023. This has opened up opportunities for nickel producers to participate in a rapidly growing market.
Untapped Market and Favorable Geology
Much of Africa’s nickel reserves remain relatively unknown and largely untapped. While major deposits have been identified in markets such as South Africa, Zimbabwe, Zambia and Tanzania, the full scale of the continent’s resources is yet to be revealed. In addition, the continent’s geological conditions are highly conducive to nickel deposits, making exploration and extraction that much more enticing. This nexus continues to attract new investments and players across the entire nickel mining value chain in Africa.
Strong Partner Base
While Africa’s nickel market is still in its infancy stage, a strong base of reliable and experienced partners is already present. Specifically, local governments and public sector entities remain committed to unlocking the potential of the burgeoning nickel industry while a suite of private sector and international firms are making headway across the market. The active participation of these players opens doors for potential mineral companies looking at entering the promising African market, with partnerships and joint ventures on the table.