Convergence – Energy –

Critical Minerals and Zambia

Member since 2021: Funded by:

Grant Support Provided by:
 Africa at the heart of a Low Carbon Future
An opportunity to be a key player in the value chain

Africa holds 30% of the world’s mineral reserves,

many of which are critical to renewable and low-
carbon technologies including solar, electric
vehicles, battery storage, green hydrogen, and
geothermal. To meet the expected rise in global
demand, production of minerals and metals will need
to increase by nearly 500% by 2050. This cannot be
achieved without Africa’s resources.

Source: MIF based on Atlas of Economic Complexity, United States Geological Survey & World Nuclear Association 2
 Context : Mining, Energy and Climate Change

Demand Commercial, Industrial, & Mining Estimated CIM demand

Country* (GW) (CIM) % of demand ** (GW)
Zambia 2.6 65.0% 1.4

55%
South Africa 35.2 53.0% 18.7
Zimbabwe 1.8 58.9% 1.0
Botswana 0.6 77.0% 0.5 Over of
Namibia 0.7 99.9% 0.7 Southern Africa’s demand is
Angola 2.7 41.0% 1.1 attributed to commercial,
Tanzania 1.5 54.8% 0.8 industrial, and mining
Mozambique 2.1 87.7% 1.9 customers; with mining
Lesotho 0.2 51.0% 0.1 being the largest consumer
Eswatini 0.3 55.0% 0.1
Malawi 0.4 10.0% 0.04
DRC 2.0 65.0% 1.3
TOTAL 49.97 27.7

Source: estimates from multiple regulator, utility, & statistical office reports and independent publications on countries 3
 Context : Mining, Energy and Climate Change

REGIONAL GENERATION MIX 2°C PATH

Solar Other $700B investment required to achieve outlined ~60-75%

Wind Significant 2°C scenario...
3% 10%
portion of this
4% coal
~490-580
Emissions (Mt CO2e)
generation sits
Hydro in South Africa
(~40GW)

Thermal

?
62%

With so much coal-

backed generation, it
goes without saying that
the energy sector has a
key role in preserving the Energy Industry Transportation Buildings Other Total 2°C Path
climate
Thermal = 48,380 MW Hydro = 3,485 MW Wind = 2,323 MW
2015 baseline 2050
Solar = 2,323 MW Other = 580 MW
To contribute to the 2°C path, South Africa,
which is responsible for the majority of the
region’s demand, needs to cut its emissions by
~60-75% by 2050

Sources: SAPP; BCG analysis: Oxford Economics; IEA - National Business Initiative 4
 Fiscal constraints and need for off-balance sheet
climate finance models

§ Balance sheets of countries are heavily constrained

and many state utilities are under borrowing
moratoriums

§ Off balance sheet options are needed.

§ For off balance sheet bankability to work there needs

to be pooling of credit risk and demand/supply risk
across the region so as to spread the fiscal impact
across borders of individual countries .

Map showing Indebtedness per Country

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 The Need for Cleaner Energy

In order to contribute to the 2°C path and meet rising demand, there is need for more renewable generation capacity.

§ With the current project financing model, this is

resulting in escalation of contingent liabilities
on governments due to sovereign guarantees
on PPAs tied to state utilities.

§ In addition, the quick onboarding of renewable

energy projects, which are variable in nature,
will put pressure on national grids and
utilities – system agreements and burden of

NEED FOR NEW BUSINESS MODELS THAT PROMOTE INVESTMENT IN RENEWABLE

ENERGY GENERATION CAPACITY WITHOUT COMPROMISING HOST GOVERNMENTS

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 Power Sector Reforms through a regional systems lens
are needed

§ African electricity markets are reforming through the Continental Master Plan (CMP) but meeting ambitious 2040
targets poses challenges.
§ The CMP offers the best chance for sustainable energy, emphasizing a least-cost model and cross-border electricity
trading.
§ Key aspects include a shift to renewables, increased transmission infrastructure investment, and the introduction of
trading regulations, shaping significant developments in Africa's power markets in 2024.
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Positive Steps in Zambia

IRP, OPEN ACCESS WORK AND PROMOTION OF OPEN ACCESS - Promotion of energy trade encourages
all players to perform their roles (generators, transmission operators, consumers, etc.) thereby promoting open
access. In his recent State of the Nation address on September 8, 2023, the president announced plans to
promote open access in the energy sector, encouraging all stakeholders to fulfill their roles and boost
investment.

UTILITIES COMPENSATED AND ABLE TO PERFORM THEIR ROLES - Even when power flows through
energy traders or IPPs, utilities are adequately compensated, resulting in enhancement of their systems and
improvement in performance.

DECARBORNISATION - Mines and other customers have access to clean, stable, flexible supply options

MORE GENERATION CAPACITY - Stimulation of investment in generation capacity through reduction of

associated transaction risks

LESS FINANCIAL BURDEN ON GOVERNMENTS – Through introduction of open access and more
competitive markets there is less reliance is put on governments for sovereign guarantees

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Zambia - an Innovative Approach to Meeting Demand

§ In its Vision 2030 Zambia has a strategic focus on diversifying its energy mix
with other renewable sources to mitigate the hydrology risk experiences of the
recent past.

§ Zambia’s unique generation mix makes it ideal for integration of VRE

to meet both domestic and regional growing demand.

§ Hydro generation is especially suited for integration with Variable Renewable

Energy (VRE) owing to it’s operational flexibility (highly dispatchable) and
preservation of clean credentials in the entire generation mix.

A call for a change in the management of Hydroelectric power from a demand-dependent approach to a
Variable Renewable Energy (VRE) dependent approach. 99
Regional Collaboration for
Enhanced Value Capture
 Leveraging Zambia’s Geographical Position,
Energy & Mineral Reserves
Why Zambia as a Regional Trading Hub?

LANDLINKED
§ Zambia's land-linked position offers a unique gateway for
trade routes to 8 neighbouring countries, making it an
essential access point

§ Rich in copper and cobalt reserves, serving as a vital

supply base for essential minerals needed across the
region and beyond.
8 NEIGHBOURING MAIN ACCESS POINT
§ Central location offers opportunities to develop COUNTRIES TO DRC
infrastructure that supports efficient transit of goods
across Southern and Central Africa.

§ Zambia's unique RE generation mix provides a reliable

and diversified energy supply, enhancing its appeal as an
investment destination for energy-intensive industries.

§ Zambia can play a pivotal role in fostering regional GENERATION

economic integration, promoting stability and growth POTENTIAL
within SADC.

Structural reforms at country level, complemented by regional integration efforts,

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are essential for fostering a conducive environment for investment
Policies for Regional Integration and Investment Attraction

Regional integration efforts, particularly in Southern Africa, can enhance market attractiveness
and facilitate investment inflows.

Zambia, a significant copper producer, stands to benefit from regional integration initiatives.

Harmonizing regulations and taxation policies across borders can create a stable and predictable
investment environment.

Emphasizing environmental standards can unlock opportunities for green finance and
sustainable development.

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Critical Minerals Market Review
Key Developments of interest to
Zambia
 Energy transition minerals are becoming a major focus for
the mining and metals markets

Clean energy technology deployment continued its upward march in

2022, with momentum expected to continue through 2023 and beyond

The rapid rise of clean energy has underpinned significant

growth in mineral demand

Source : Critical Minerals Market Review 2023 14

 Thanks to heightened demand and rising prices, the market size
for energy transition minerals doubled over the past five years,
reaching USD 320 billion in 2022

The market size for nickel includes both Class 1 (battery grade) and Class 2 nickel.
Source : Critical Minerals Market Review 2023 15
 Investment in critical mineral mining rose by 30% in 2022 as
strengthening momentum for energy transitions offers prospects for
robust demand growth

Source : Critical Minerals Market Review 2023 16

 Graphite and rare earth elements are set to gain increasing
traction in the critical mineral's discussion

t = tonne; REE = rare earth elements, REO = rare earth oxide. Natural graphite is based on production of natural
flake graphite, Magnet REEs include neodyminium, praseodymium, dysprosium and terbium.

Source : Critical Minerals Market Review 2023 17

 Critical minerals demand for clean energy is set to grow by up to
three-and-a-half times over the period to 2030 as the world moves
through energy transitions

Source : Critical Minerals Market Review 2023 18

 Clean energy technologies continue to be a major force in driving
demand growth for key minerals

Source : Critical Minerals Market Review 2023 19

Conclusion
 Navigating the
Clean Energy Transition

§ Critical minerals are indispensable for achieving

sustainable energy transitions globally.

§ Developing countries, including those in Southern

Africa like Zambia, must capitalize on their mineral
resources while addressing inherent challenges.

§ Strategic policies, regional collaboration, and

comprehensive reforms are essential for maximizing the
socio-economic benefits of critical minerals and ensuring
sustainable development in the era of clean energy.

§ Navigating the clean energy transition requires not only

leveraging mineral wealth but also investing in
technological advancements and infrastructure to support
efficient extraction, processing, and renewable energy
integration.

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 Countries that have adopted national mineral
strategies, 2010-2023

Source : Geopolitics of The Energy Transition Critical Materials 22

 Transformational Actors : RE Aggregators and Traders like
GreenCo

Boosted Creditworthiness that Aggregation of offtake and

does not ride on governments supply
Aggregators stimulate investment Aggregators build significant
into RE generation through their sourcing and supply portfolios and
offer of reduction of transaction can supply baseload RE to
risks. In addition, their bankability several mines without
does not hinge on government geographical restrictions,
support quashing the notion that mines
cannot rely on RE

Aggregators create value Flexibility in offering

By virtue of being market players, Aggregators harmonise PPA-PSA
Aggregators can source tenor mismatch, thereby providing
competitive power, thereby mines with short/medium/long
helping reduce the cost of term options without
electricity and attracting more compromising long-term IPP
mining companies. PPAs

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 OUR MISSION
Addressing creditworthiness to increase
generation and growth of renewable energy
markets through partnerships and innovative
solutions

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