Assessing Mineral Extraction Efficiency in Africa: Insights from Economic Theory

This paper examines the extraction behavior of key minerals in African countries and at the regional level, assessing whether current practices align with the Hotelling Model. It also investigates the optimal depletion period by comparing actual resource extraction durations with those predicted by the economic theory. The study presents a continental overview of optimal extraction paths under varying discount rates, alongside country-specific analyses. The findings indicate that actual resource extraction does not conform to Hotelling’s prediction. Optimal depletion times are estimated between 240 and 256 years for Africa, compared to an average actual depletion time of 105 years for the seven selected mining sectors. These results highlight the need for increased efficiency in extraction processes, as inefficiencies may deprive mining firms and public authorities of substantial financial resources, in addition to addressing economic and environmental challenges.