Stranded Assets: The Nexus Between Extractives, Climate, & the Circular Economy Within the African Extractives Sectors

The document examines how the global shift toward low-carbon energy, driven by the Paris Agreement, creates a risk of stranded assets for fossil fuel-dependent African nations. While this transition threatens export revenues and economic stability, it offers opportunities through increased demand for critical minerals like cobalt and copper. The author argues for a 'just transition' that avoids premature deindustrialisation and leverages fossil fuel revenues for economic diversification and green industrialisation.

• Climate mitigation efforts, specifically the Paris Agreement, create a high risk of asset stranding for African countries dependent on fossil fuel revenues. It is estimated that to meet Paris Agreement targets, Africa would need to leave 90% of its coal, 34% of its oil, and 26% of its gas reserves untouched.
• The transition to a low-carbon economy presents a risk of 'premature deindustrialisation' in developing African countries, where economies shift from manufacturing to low-value services before achieving full industrialisation. To mitigate this, the author suggests adopting green industrialisation strategies, such as entering the global value chain for battery or solar panel production.
• Despite the risk to fossil fuels, the energy transition increases demand for mineral energy materials essential for low-carbon technologies, such as electric vehicle batteries and wind turbines. Key minerals include cobalt, copper, lithium, nickel, manganese, and rare earth elements.
• Public energy finance in Africa remains heavily skewed toward fossil fuels. Between 2014 and 2016, nearly 60% of public finance for energy in Africa was directed to fossil fuels (averaging $11.7 billion annually), while only 18% went to renewable energy.
• The 'resource curse'—characterized by rent-seeking, corruption, and weak governance—continues to hinder economic growth in resource-rich African nations. Examples include Nigeria, where despite high oil production, 86.9 million people live below the poverty line of $381 per year.
• Economic diversification is presented as a primary strategy to mitigate the impact of stranded assets. Ghana is cited as an example through its 'One District, One Factory' (1D1F) initiative, which aims to reduce dependence on natural resources and foreign aid by building factories in 260 districts.
• The impact of fossil fuel divestment is inconsistent. While over 1,300 institutions controlling $14.5 trillion have divested, 60 global banks have financed fossil fuel projects worth over $3.8 trillion since the 2015 Paris Agreement.

APA

Siyobi, B. (2021). Stranded Assets: The Nexus Between Extractives, Climate, & the Circular Economy Within the African Extractives Sectors. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2021/07/Policy-Insights-112-siyobi.pdf

Chicago

Siyobi, Busisipho. Stranded Assets: The Nexus Between Extractives, Climate, & the Circular Economy Within the African Extractives Sectors. South African Institute of International Affairs, 2021. https://saiia.org.za/wp-content/uploads/2021/07/Policy-Insights-112-siyobi.pdf.

Wikipedia

{{cite report |last1=Siyobi |first1=Busisipho |title=Stranded Assets: The Nexus Between Extractives, Climate, & the Circular Economy Within the African Extractives Sectors |publisher=South African Institute of International Affairs |date=June 2021 |url=https://saiia.org.za/wp-content/uploads/2021/07/Policy-Insights-112-siyobi.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{siyobi2021stranded, author = {Siyobi, Busisipho}, title = {{Stranded Assets: The Nexus Between Extractives, Climate, \& the Circular Economy Within the African Extractives Sectors}}, institution = {South African Institute of International Affairs}, year = {2021}, month = jun, url = {https://saiia.org.za/wp-content/uploads/2021/07/Policy-Insights-112-siyobi.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }