African countries are stepping up efforts to process more of their mineral resources locally, attracting investor interest as governments seek to create jobs, expand industries and retain more economic value from their natural wealth.
However, unreliable and expensive electricity remains a major obstacle to the continent’s ambitions, threatening the viability of mineral processing projects that require substantial and consistent power supplies.
According to a Reuters report published on October 19, 2026, governments across Africa are using tax incentives, mining rights and export restrictions to encourage companies to establish refineries and smelters within their borders.
Investors, including the US International Development Finance Corporation and Africa Finance Corporation, are supporting processing projects as the continent seeks to move beyond exporting largely unprocessed minerals.
Guinea Pushes for Local Processing
Guinea has emerged as a major example of the drive to develop domestic mineral processing. The country, one of the world’s leading bauxite producers, is seeking to expand its alumina refining capacity and eventually develop aluminium smelting.
Daouda Diakite, a senior adviser to Guinea’s mines minister, said three alumina refineries were under construction, while the government aims to establish five by 2030, with combined annual production capacity of seven million to eight million tonnes.
The government is also encouraging investment in iron ore processing, including pellet plants, as part of its broader industrialisation strategy.
However, Guinea’s electricity generation capacity of about 1,000 megawatts falls short of the estimated 5,000 to 10,000 megawatts required to support its industrial ambitions.
The energy shortage could limit the expansion of processing facilities unless the country secures additional reliable power sources.
South Africa Offers a Warning
South Africa’s experience highlights the risks associated with high electricity costs.
The country’s ferrochrome industry has suffered as rising power costs have undermined the competitiveness of domestic smelters. According to Reuters, fewer than 12 of South Africa’s 66 ferrochrome smelters were operating.
The situation demonstrates how countries with substantial mineral reserves can lose processing opportunities when energy becomes too expensive or unreliable.
Meanwhile, China has expanded its refining capacity, supported by competitive power supplies, strengthening its position in global mineral processing.
Investors Seek Reliable Conditions
Industry stakeholders say successful mineral processing projects require more than access to mineral deposits.
Reliable electricity, consistent raw material supplies, stable government policies, committed buyers and access to capital are essential to attracting long-term investment.
Africa Finance Corporation has also highlighted the substantial financing requirements associated with processing projects, which can involve billions of dollars in infrastructure and industrial investment.
For African governments, the challenge is to build the infrastructure needed to make local processing commercially viable while ensuring that incentives translate into sustainable economic activity.
The continent’s mineral wealth presents significant opportunities for industrialisation, but converting those resources into higher-value products will depend on whether countries can overcome energy constraints and create competitive conditions for investors.
Source: Reuters, October 19, 2026 : Africa’s minerals value-add drive interests investors but faces energy hurdle.
