Multilateral development banks (MDBs) are fundamentally reorienting their critical minerals strategies, moving away from financing extraction-only projects toward supporting local processing, refining and manufacturing in developing economies, according to a review of recent policy shifts and investment frameworks.

The change reflects a growing consensus that simply digging up minerals and shipping them abroad perpetuates the “resource curse” — enriching foreign buyers and processors while leaving host countries with limited industrial capacity, few jobs and little economic diversification.

The World Bank’s “Minerals for Climate Action” report, published in 2020, estimated that the clean energy transition would require more than 3 billion tons of minerals and metals — including lithium, cobalt, nickel and rare earths — to deploy wind, solar, geothermal and energy storage technologies. But the bank has since sharpened its focus on where and how those minerals are processed.

In its 2024 “Critical Minerals and the Energy Transition” framework, the World Bank emphasised that developing countries could capture significantly more value by moving into refining, smelting and downstream manufacturing rather than exporting raw ore.

The bank’s International Development Association (IDA) has begun financing technical assistance and feasibility studies for mineral processing parks in several African countries.

The African Development Bank (AfDB) adopted a Critical Minerals Strategy in 2024 that explicitly prioritises “local value addition, beneficiation and industrialisation.” The AfDB has said it will support joint ventures that pair raw material supply with processing capacity, and it has backed the development of the Lobito Corridor — a rail and logistics project linking the Democratic Republic of Congo and Zambia’s copper and cobalt mines to Angola’s Atlantic port — with the explicit goal of enabling more processing within the region.

“The era of simply extracting and exporting raw minerals is over,” said a senior AfDB official speaking on background. “Our member countries have made it clear that they want industrialisation, jobs and technology transfer, not just royalty payments.”

The shift is not limited to multilateral lenders. The US Development Finance Corporation (DFC) has invested in processing projects in Africa, including a battery precursor plant in the DRC and a lithium processing facility in Nigeria. The US-led Minerals Security Partnership (MSP), which includes the World Bank and AfDB as observers, has prioritised projects that include “downstream processing and manufacturing” as part of its eligibility criteria.

The European Union’s Global Gateway initiative has also earmarked funding for mineral processing and refining in partner countries, with a focus on reducing dependence on Chinese-controlled processing capacity.

The DRC-Zambia Battery Precursor Project

One of the most concrete examples is the proposed DRC-Zambia battery precursor project, backed by the United Nations Economic Commission for Africa (UNECA), the AfDB and the US government. The project aims to establish a facility in the Lobito Corridor that would process cobalt and copper from both countries into battery-grade precursor materials — a critical step before cathode production.

The project has received feasibility funding from the AfDB and the US Trade and Development Agency (USTDA), with commercial production targeted for the late 2020s. It is designed to demonstrate that value addition can happen in Africa rather than in China, South Korea or Europe.

Challenges Remain

Despite the strategic shift, MDBs face significant hurdles. Processing and manufacturing require reliable electricity, skilled labour, water, environmental safeguards and access to markets — conditions that are often lacking in mineral-rich developing countries. The capital intensity of refining and smelting projects can also strain MDB balance sheets.

In addition, some host governments have struggled to enforce local content requirements. Indonesia’s nickel ore export ban, introduced in 2020, successfully attracted Chinese processing investment, but critics note that the resulting industrial capacity is largely foreign-owned and reliant on Chinese technology and financing.

For MDBs, the challenge is to finance projects that are commercially viable without crowding out private capital, while ensuring that local communities and workers benefit from the industrial transformation they are promoting.

The Bottom Line

The shift toward local processing and manufacturing represents a significant evolution in how development banks approach critical minerals. Rather than simply financing mines, they are increasingly financing the infrastructure, skills and industrial capacity that allow developing countries to capture more of the value chain. Whether this strategy succeeds will depend on whether the financing, policy support and market access align — and whether host governments can create the enabling environment that processing and manufacturing require.