Securing Minerals for the Energy Transition 2025

Illustration of policy uncertainty BOX 1 Zimbabwe imposed a special capital gains tax of 20% on the proceeds of transferring a mining title, which mining companies operating in the country have deemed high and detrimental to their operations.14 Policy and regulatory factors Key challenges Trade and tax policy –Tariffs, export bans and inconsistent regulations can hinder exports –Uncertain tax regimes and volatile, highly complex and subjective tax legislation can directly impact mining activities through ambiguous royalty rates Local content requirements and benefit mandates –Regulatory barriers to beneficiation can discourage local value addition and refinement, leading to the export of raw materials instead of processed goods State capacity to enforce policies –Delays in government approvals and lack of consistency in regulatory frameworks can hinder project timelines. Similarly, lack of capacity to structure and de-risk deals and policy inconsistency can lead to legal disputes and governance uncertainty in the form of regulatory changes, which can in turn deter investmentsWhile policies are often designed to advance national priorities, inconsistencies and governance uncertainty could still undermine investor confidence. Illustration of a consequence of investment risk BOX 2 According to a partner at the Critical Minerals Fund, around $17 billion of specialist mining capital is held by private equity funds globally, with only 2.8% focused on Africa.15 Investment risk category Key challenges Securing early-stage investments –Limited access to diverse funding options during development often forces companies to give up significant equity –Early-stage financing for large-scale projects in high-risk regions remains a key challenge –Financial institutions may face mandate restrictions and short tenures, limiting their ability to support critical minerals investment Sector constraints –Mining critical minerals is highly capital-intensive, and the lack of local expertise in advanced processing further deters investment –The competitiveness of local processing and refining is often hindered by market dominance and state subsidies provided in markets outside the region Sector-specific risks and barriers –Investors are often wary of unstable economic conditions in some SAR countries, leading to reluctance when committing to financing projects in the region –The lack of quality geological data and issues around bankability barriers can make it challenging to secure investment for extraction in the regionMining is an inherently risky activity, which can be compounded by other potential risks in SAR.Investment risks 2Policy uncertainty 1 Securing Minerals for the Energy Transition: Finance for Southern Africa 12