Africa poised to start reaping from the growing scramble for its natural wealth

Africa’s natural resource wealth is well-known. Unlike in some other more nascent areas of economic potential, the continent’s natural resource wealth has long been an area of concerted local and foreign interest.

Yet a confluence of factors, including surging demand from the world’s rapidly advancing emerging economies and more favourable investment climates have led to swelling demand for Africa’s natural bounty over the course of the past decade.

In addition to its solid minerals and energy resources, Africa is increasingly being courted for its abundant arable land as a rapidly rising global population, coupled with elevating in-comes and concomitant increases in per capita food consumption throughout the emerging south, places pressure on agricultural production.

Africa has a dominant share of a variety of core commodities, most profoundly PGMs, chromite ore, phosphate rock, and cobalt, according to the United States Geological Survey (USGS).

The DRC is home to more than half of the world’s cobalt reserves, South Africa to more than 90 per cent of the world’s platinum, and Morocco and the Western Sahara to more than three-quarters of the world’s phosphate rock.

Meanwhile, Africa’s potential is equally alluring in a range of commodities for which future production prospects are elevated.

The continent has around 27 per cent of the world’s bauxite reserves, yet only accounts for eight per cent of global bauxite production.

At the end of 2010, Africa was understood to have proved crude oil reserves of 130.2 billion barrels, 9.5 per cent of the world total, as well as 14.7 trillion cubic metres of natural gas reserves, eight per cent of the world total.
Most important is the fact that Africa’s proved oil and gas reserves have increased at a rate far in excess of the world average since 1990.

Even more important is the relative accessibility of Africa’s oil and gas reserves, compared to some markets in the Middle East and Latin America.

Much of the renewed interest and investment in Africa’s commodities wealth has originated within the world’s rapidly advancing, industrialising, and urbanising emerging economies.

Consider, for instance, that while in 2010 just over 45 per cent of the total BRIC population was urbanised, by 2050 this ratio will exceed 65 per cent — implying that over 2.2 billion people will be living in BRIC cities.

This mass urbanisation, when coupled with robust economic growth and industrialisation, is creating demand for commodities. To be sure, China’s appetite has been most voracious.

Buoyed by increasing automobile production, China has emerged as a leading PGM consumer — accounting for 24 per cent of total global consumption last year.

In 2010, China accounted for 85 per cent of total global chromite ore consumption.

It also accounts for 35 per cent of total copper consumption worldwide.