AMI Side session-Changes in the Global Energy Value Chains: Implications for Africa
Dates: 9 February 2023
Venue: Amatheko (Thibault Square, Cape Town)
Introduction and Background
The 2023 Alternative Mining Indaba (AMI) will be held under the theme, A just energy transition: Unlocking community potential and participation. The AMI will be held against the backdrop of a climate crisis undermining global energy security with Africa being the most vulnerable region. According to the 2021 World Energy Outlook Report, clean energy technology is becoming a major new area for investment and employment – and a dynamic arena for international collaboration and competition. However, transformations still have a long way to go. Precisely, this is because data shows that the speed of change in energy can be countered by another showing the stubbornness of the status quo. Further, the uneven economic recovery from Covid-induced recession is putting strains on parts on energy systems, sparking sharp price rises in natural gas, oil, and coal and electricity markets. In addition, because of the Russian-Ukraine war, there is increased demand for energy, with some countries like Germany reverting to coal usage. Progress towards universal energy access has stalled, especially in sub-Saharan Africa. The direction of travel is a long way from alignment with the IEA’s landmark Net Zero Emissions by 2050 Scenario (NZE).
During the 2022 AMI held in South Africa between 9-12 May 2022, it was acknowledged that while Africa cannot escape the calls for an energy transition; we need to determine at which pace, to whose benefit and at what expense the transition will take place and how the impact of the transition will manifest for mining affected communities, and others directly or indirectly affected. It was also resolved that for Africa to achieve a just energy transition it would require more dialogue, strengthened community capacity and greater inputs from those who will shoulder the consequences of policy and financial decisions around the transition. In dealing with the energy crisis on the continent, Africa has received a considerable amount of investments from China. In fact, China has become a major player in Africa’s energy landscape. The deepening of economic and technical cooperation between Africa and China has created an avenue whereby Chinese technology and capital to finance and develop renewable energy infrastructure flows into the continent. This is being facilitated by the ‘Going Global Strategy’ which was officially launched in 2001. As a result of this strategy, Chinese enterprises are actively involved in a wide range of energy related activities, including, but not limited to Engineering Procurement Construction and financing contracts, supplying energy technologies. A report released by the International Electricity Agency (IEA) highlights that Chinese contractors built 30% of the new generation capacity on the continent between 2010 and 2015, which were dominated by renewables. Recent data released by the China Global Energy Finance Database at Boston University suggests that between 2003 and 2023, Chinese enterprises and financial institutions will have been involved in 67 energy (with installed generation capacity of 26.7GW) projects, some already commissioned and others under planning. Albeit the clean energy investments from China will contribute to energy transition and reduction of greenhouse gas emissions, there are still many coal power plants receiving support from Chinese entities. This is despite the policy pronouncement by the President Xi Jinping in 2021, that China would stop building coal power overseas.
On the extraction of transitional minerals front, China is also a leading player because of the high global demand and consumption of lithium-ion batteries. China is estimated to be the world’s undisputed king of battery production, with China’s largest battery manufacturer Contemporary Amperex Technology Co. (CATL) alone holding around 35 percent of the global li-ion battery market in the first quarter of 2022. In the field of solar battery modules, Chinese companies hold around 71 percent global market share. Notwithstanding China’s dominant position in manufacturing, the country remains reliant on imports for key materials. China’s main sources of lithium are countries such as Australia, Chile, and Argentina. In countries like Zimbabwe with large lithium deposits, and Democratic Republic of Congo with the largest cobalt deposits, Chinese companies control production of these critical minerals.
For civil society and communities, it is vital to understand the real owners of these extractive companies within the transitional minerals sector. As has been noted in other extractive companies, revealing beneficial ownership is particularly a challenge and this increases risks of corruption or conflict of interest.It is estimated that developing countries have lost USD 1 trillion a year since 2011 as a result of corrupt or illegal deals, many of which involve anonymous companies. Investigations using beneficial ownership information culminated in data leaks such as the Panama Papers, the Luanda Leaks and the Pandora Papers. The EITI has been able to deliver practical results through the inclusion of beneficial ownership information in licensing and company registration processes as well as through EITI reporting. However, not all countries have joined and domesticated these best practices. Thus to achieve energy transition that is just and fully benefits the communities who bear the brunt of extraction of resources, addressing beneficial ownership remains critical. For African continent, the Africa Mining Vision is also key in promoting transparency and accountability in the energy sector.
 World Energy Outlook (2021), https://www.iea.org/reports/world-energy-outlook-2021
 Scaling China’s Green Energy Investment in Sub-Saharan Africa: Challenges and Prospects; https://africanclimatefoundation.org/wp-content/uploads/2021/11/800539-ACF-NRDC-Report.pdf