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With rising carbon-disclosure requirements and shareholder scrutiny, fossil fuel exposure is increasingly seen as a fiduciary liability. Mining value is no longer defined by tonnage or geography, but by how much of a portfolio aligns with a decarbonised economy – a metric that now determines access to capital, investor appetite and long-term survival.
Africa's position at the centre of this transformation is undeniable. The continent holds substantial reserves of minerals critical to decarbonisation, including 55% of global cobalt, 47.65% of manganese, and significant deposits of lithium and copper. Meanwhile, Sub-Saharan Africa stands to capture over 10% of an estimated $16 trillion in global revenues from copper, nickel, cobalt, and lithium extraction over the next 25 years.
In 2024 alone, Africa's energy transition M&A reached $12 billion, marking a 140% increase in deal value. Yet many African corporates remain deeply invested in the old economy. South Africa, which accounts for over 60% of African M&A deals by value, faces a particularly acute challenge: its coal-dependent energy sector represents nearly 80% of coal power capacity across Africa and the Middle East, making it the sixth-largest coal fleet globally. The country's draft Integrated Resource Plan envisages decommissioning over 35,000 megawatts of coal by 2050, creating an urgent imperative for portfolio restructuring.
This reset demands more than regulatory compliance. It requires surgical precision in transaction structuring to ensure deals are not merely symbolic gestures but genuinely profitable repositioning of capital. The legal architecture of these transactions will determine whether African firms emerge as winners or casualties of the transition.
Ring-fencing the past whilst acquiring the future
Consider the dual challenge: disposing of coal-fired power plants or thermal coal mines whilst simultaneously acquiring lithium projects in Zimbabwe, cobalt operations in the Democratic Republic of Congo, or solar installations in Morocco. Each transaction presents distinct legal complexities. On the disposal side, sellers must ring-fence themselves from future environmental liabilities and social impact claims that could surface years after completion. The structuring must clearly delineate responsibility for legacy clean-up costs and community obligations, often requiring indemnity provisions, warranty caps, and escrow arrangements that reflect the long tail of environmental risk.
Acquisitions of green assets present equally complex challenges. Green mineral projects typically involve intricate resource licensing frameworks, cross-border regulatory hurdles, and public-private partnership structures that vary dramatically across jurisdictions. Due diligence must extend beyond traditional mineral reserve assessments to evaluate regulatory stability, energy security for processing operations, and the viability of renewable power sources. When Northam Platinum announced plans for a 180 MW solar facility to power its Zondereinde operations in South Africa in 2024, the transaction required careful assessment of power purchase agreement terms, grid connection rights, and long-term energy supply guarantees.
The financial imperative driving this restructuring is stark. Institutional investors managing $40 trillion globally have divested from fossil fuels. ESG-mandated investment is no longer a niche consideration but a determinant of capital access. Dutch pension fund ABP's decision to divest €15 billion in fossil fuel investments exemplifies how quickly formerly stable funding sources can evaporate for companies on the wrong side of the transition.
For African corporates, acquiring green assets has thus become a defensive strategy as much as a growth opportunity. Deals like Shell's $2.4 billion exit from Nigeria's onshore operations and the expansion of renewable energy M&A in South Africa demonstrate how rapidly portfolios are being reconfigured.
Structuring for profitability
Considering all this, acquisition success still hinges on legal structuring that accounts for Africa-specific risks. Currency volatility, political instability, and inconsistent regulatory frameworks require transaction structures that provide downside protection whilst preserving upside potential. Joint ventures with state-owned enterprises, local content requirements, and mineral beneficiation obligations must be carefully integrated into deal terms. The creation of infrastructure corridors like Angola's Lobito Corridor illustrates how supply chain considerations increasingly influence transaction structuring.
The profitability equation extends beyond immediate financial returns. Companies must structure deals to capture value across the entire chain, from raw mineral extraction to processing and manufacturing. Currently, Africa exports most critical minerals in unprocessed form, losing substantial value. Raw lithium commands approximately $65 per ton, whilst processed aluminum fetches $2,335 per tonne. Zimbabwe's thousand-truck daily convoys carrying unprocessed lithium to ports for shipping to China represent billions in foregone value.
Transaction structures that incorporate processing facilities, refining operations, and downstream manufacturing capabilities will ultimately prove most profitable. The $310 million agreement signed in 2024 to build a three-million-tonne-per-annum lithium processing plant at Zimbabwe's Sandawana Mine demonstrates how integrated deal structuring can capture additional value whilst meeting local beneficiation requirements.
The measure of business success in Africa is no longer simply revenue growth or market share. It is the speed and sophistication with which companies can legally restructure their portfolios away from stranded assets and towards the green economy. In this great corporate reset, M&A expertise centered on green minerals and renewables has become mission-critical. The deals being struck today will determine which African firms thrive in the decarbonised economy and which are left holding worthless assets in sunset industries.
