South Africa is better positioned than most African countries to move beyond mining and into higher-value processing of critical minerals, but logistics bottlenecks and policy uncertainty continue to limit investment, says Moody’s Ratings.In a recent report, the ratings agency said South Africa’s relatively advanced infrastructure, diversified industrial base and improving electricity supply gives it a stronger foundation for developing downstream industries than many of its regional peers.The country is also one of the world’s largest producers of critical minerals, accounting for about half of global manganese and platinum group metal (PGM) output.However, Moody’s said South Africa continues to capture only a limited share of the value generated from these minerals.While primary refining of PGM largely takes place locally, higher-value fabrication is concentrated in the US, Europe and Japan. China, meanwhile, dominates manganese refining, leaving South Africa largely dependent on exporting raw or minimally processed material.“Overall, South Africa has a strong foundation for downstream development,” Moody’s said.However, the agency cautioned that lingering electricity supply risks, as well as rail and port constraints affecting manganese exports, continue to undermine incentives to invest in refining and processing facilities.It also said policy uncertainty has weighed on investor confidence.Moody’s said South Africa’s relatively advanced infrastructure and industrial base, with its dominant position in PGM and manganese, make incremental progress into downstream processing more achievable than in many other African countries. However, “energy, logistics and governance constraints have continued to slow momentum”, the ratings agency said.The report says rapidly growing global demand for critical minerals used in batteries, renewable energy technologies, digital infrastructure and defence applications presents resource-rich emerging markets with an opportunity to move beyond extracting raw materials into higher-value activities such as processing and refining.According to the International Energy Agency, demand for key critical minerals could increase between two and nine times by 2050, depending on the commodity, with lithium expected to record the strongest growth.Moody’s said countries that successfully move up the value chain stand to strengthen economic growth, increase tax revenue, diversify exports and improve sovereign creditworthiness over time.However, it cautioned that mineral reserves alone are insufficient. Countries also need reliable and competitively priced electricity, efficient transport infrastructure, regulatory predictability, strong institutions and industrial capability to support processing and refining, which are energy- and capital-intensive.Biggest obstacleThe report notes that Africa holds more than half of the world’s cobalt reserves and about 80% of PGM reserves, yet most countries on the continent continue to export critical minerals in raw form.Infrastructure remains the region’s biggest obstacle. Moody’s said unreliable electricity, inadequate transport networks, limited industrial water, constrained access to capital and regulatory uncertainty continue to hamper the development of downstream industries.It said multilateral development banks and advanced economies are increasingly financing projects to improve power supply, transport infrastructure and mineral processing capacity in emerging markets.For South Africa, Moody’s highlighted EU Global Gateway financing aimed at supporting critical minerals value chains as one example of international efforts to encourage downstream development.The ratings agency said countries that combine abundant mineral resources with reliable infrastructure, stable policy environments and stronger domestic industrial capabilities will be best placed to capture more value from the global critical minerals boom and strengthen their long-term economic resilience.