South Africa's digital economy is being undermined by local beneficiation for copper, which has become an essential mineral in the age of artificial intelligence — from data centres, electricity cables and battery storage. (Flickr)
South Africa’s digital economy is being undermined by electricity instability and the lack of local beneficiation for copper, which has become an essential mineral in the age of artificial intelligence (AI) — from data centres, electricity cables and battery storage.
The department of mineral and petroleum resources said South Africa consumed 47 million kilogrammes of copper in 2024, with 40 million kg (84%) imported from Asia, 4.4 million kg from Europe and 2.8 million kg from Africa. Much of the country’s own output, including deposits in Okiep in the Northern Cape, is exported unprocessed.
Local copper production has fluctuated over the years, with mines in the Northern Cape producing negligible output. Most of the copper in the Southern African Development Community (SADC) is exported from Zambia and the Democratic Republic of the Congo.
With the mineral being a “a critical enabler” of South Africa’s digital transition, investing in local copper value addition would strengthen the country’s position in the global digital economy, generate skilled jobs and ensure that its mineral wealth supports inclusive, technology-enabled growth, the department said in response to questions from the Mail & Guardian.
“Copper is part of the minerals considered strategic, and as a result, promotion of its beneficiation is a priority,” it said.
The department said that it plans to develop regional beneficiation hubs for copper and cobalt in the SADC region as part of the battery manufacturing regional value chain.
The country risks being left behind unless it seizes the digital economy through innovative copper production models, warned Hlengiwe Mtetwa, a delegate on digital Innovation, education and the future of work at Y20, the official youth engagement group of the G20.
South Africa holds the presidency of the G20 — an international forum of developing and developed countries that seeks to find solutions to global economic and financial issues — and will host its annual heads of state summit in Johannesburg in November.
“The prospects and pitfalls around generative AI and digitisation mean that nearly one in five young people globally are currently out of work, two-thirds of them being women. At the same time, the digital economy can create new jobs if we build skills and infrastructure,” Mtetwa said.
“Projections suggest South Africa’s tech sector could nearly double its GDP contribution by 2030, creating around 1.2 million jobs in AI, cybersecurity and cloud computing.”
Without the adoption of emerging technologies such as copper recycling, many young people will remain trapped in low-productivity work, Mtetwa added. “With youth unemployment at 62%, every tool must be used to automate gaps and boost productivity.”
She said that globally, about 20% of refined copper comes from scrap. South Africa should treat scrap as a “strategic resource” that is infinitely recyclable.
“Manufacturers ought to manufacture with the end-of-life of the product in mind, meaning that they’ll firstly extend the shelf life of these products by producing higher-quality products, then those who recycle and refine use resources in innovative ways.”.
Copper recycling plants in South Africa would create immediate jobs and reduce import dependence through the entire recycling value chain — from collection, sorting, pre-processing to refining.
“Also, by encouraging and promoting the processing of copper products locally, South Africa can reduce its reliance on importing these goods, saving valuable foreign exchange and strengthening its domestic industrial base,” Mtetwa said.
The green economy could further expand employment, with one study finding that the African continent’s clean-energy transition could create 3.3 million jobs by 2030, up to 275 000 of those in South Africa.
The department of electricity has committed to adding 27 gigawatts of new generation capacity by 2030. African Data Centres is building a 12 megawatt solar farm for its Johannesburg and Cape Town facilities. Kenya is attracting a $1 billion geothermal-powered data centre project.
But Mtetwa said progress is slow.
“We need urgent investment in transmission, storage and smart demand systems to fully support AI. Google’s Johannesburg data centre will support thousands of jobs, and Microsoft plans to train a million South Africans in AI and security,” she said.
The countries that will win the AI data centre race are those with abundant, clean and cheap electricity, energy expert Nick Headly said. “South Africa has none of those yet.”
Headly said: “Data centre operators and big tech companies have goals to run their data centres on clean electricity only, and this places South Africa at a disadvantage given our unusually high reliance on coal and our weak decarbonisation plans.”
If the government could stabilise the electricity grid and fix logistics, this would enable job growth.
“We can’t localise copper production or attract data centres if power cuts and rail delays persist. On the one hand, some industries are really under threat. For example, our call centre industry, which has been one of the few bright spots for job growth in recent years, could start to shrink in the era of AI,” said Headly.
New jobs will emerge for electricians, data technicians and copper specialists, he added.
“If we get energy and policy right, copper could power an industrial revival. We also do not have sufficient generating capacity to support a fast-growing AI data centre industry, ” he said. “The government needs to quickly expand the national electricity grid and procure huge amounts of clean electricity to unlock the AI and data centre opportunity.”
Asked how the country is working to localise production and value addition in the copper supply chain, Headly said: “We’ll need to get the basics right first, and that includes restoring energy security by quickly scaling up supply, and fixing our rail and ports network.”
The department of mineral and petroleum resources conceded that as global demand for copper surges because of smart mining, electrification and AI, “South Africa has significant reserves, but underperforms on beneficiation”.
Globally, electricity demand from data centres is projected to nearly double from 2022 to 2026. Locally, large commercial data centres already draw 12 to 20 megawatts each — enough to power up to 13 000 homes.
“Without bold integration of renewables, we risk locking into an unreliable grid — jeopardising digital transformation and climate goals,” Mtetwa said. “Public-private partnerships must ensure electricity serves everyone, not just big tech.”
Asked whether the country’s electrification strategy can meet rising AI energy demand, she said: “Even before AI uptake, South Africa had an electricity crisis. The AI-driven economy is power-hungry, and our grid is not ready. Our grid still rations power.”