Chinese language miners and refiners are driving a surge in African lithium output, shrugging off issues over a glut to lock in future provides of the important battery steel.
The continent is projected to account for nearly 11% of world provide this 12 months, in contrast with near zero in the beginning of the last decade, in accordance with S&P World Commodity Insights. That’s projected to extend to greater than 14% by 2028.
A spike in lithium costs in 2021 and 2022 fuelled a wave of funding by Chinese language firms in African manufacturing. The steel has since plunged greater than 80% after provide elevated whereas gross sales of electrical autos lag expectations.
Regardless of an anticipated world manufacturing surplus this 12 months, China — which makes a lot of the world’s lithium chemical compounds — continues to broaden its refining capability and is rising extra depending on materials from abroad, mentioned Claudia Prepare dinner, an analyst at Benchmark Mineral Intelligence. “As there’s rising resistance to Chinese language involvement in lithium tasks within the Western world, Africa is effectively positioned to fill this feedstock hole.”
Greater than two-thirds of the continent’s output comes from Zimbabwe, the place Chinese language companies, together with Zhejiang Huayou Cobalt, Sinomine Assets Group and Chengxin Group, have spent billions of {dollars} to fee mines and processing crops. Firms from China or with Chinese language backing are additionally growing tasks in Mali, Namibia and Nigeria.
Throughout Africa, 15 mines which might be underneath growth or being expanded are as a consequence of be producing by 2030, in accordance with Lukasz Bednarski, S&P’s principal analysis analyst for lithium and battery metals. Most are “sustainable”, even at present costs, he mentioned. “It’s actually important progress within the final three years.”
Surplus to deficit
That new capability will come on-line because the market is predicted to return to a deficit, following a peak world lithium surplus in 2027, in accordance with Benchmark.
Whereas manufacturing from Zimbabwe is extra clear because of the presence of business mines, provide from nations like Nigeria – which till now has exported lithium ore that’s been extracted with rudimentary instruments – is more durable to trace. That nation was the second greatest supply of African lithium through the previous 12 months and a half, mentioned Thomas Matthews, battery metals analyst at CRU Group.
Greater than half of Africa’s manufacturing final 12 months got here from hand-dug or small-scale exercise, in accordance with Matthews. That’s altering, although, with “progress in output from industrial operations anticipated to eclipse the casual exercise”, he mentioned.
Learn: Lithium costs are set to spiral: Sibanye CEO
Nigeria opened its first lithium processing facility in Could and has a number of extra China-backed tasks underneath growth, as the federal government seeks to control the commerce and maximise income.
Low-grade materials from Africa made up greater than 1 / 4 of all China’s lithium imports on a steel contained foundation through the first half of this 12 months, Matthews mentioned.
Western firms are additionally seeking to faucet African lithium. Sydney-registered Atlantic Lithium is constructing Ghana’s first lithium mine, supplying focus to the US that may profit from tax credit launched by President Joe Biden. London-listed Andrada Mining and Canada’s Tantalex Lithium Assets are growing tasks in Namibia and the Democratic Republic of Congo respectively.
Firms belonging to Algy Cluff – a British businessman finest recognized for serving to pioneer the UK’s offshore oil and fuel business within the Nineteen Seventies – and Hugh Morgan, an Australian entrepreneur who headed a copper and nickel miner that was acquired by BHP Group for A$9.2-billion 20 years in the past, are additionally aiming to provide important volumes of lithium in Zimbabwe and Nigeria.
Whereas Australia, Chile and China are anticipated to make up about 70% of complete provide this 12 months, African mines will assist scale back their share to simply over half by the last decade’s finish, in accordance with Benchmark’s Prepare dinner.
The continent’s rising prominence “represents a wider development within the diversification of the place lithium is being produced”, she mentioned. — William Clowes, with Annie Lee and Nduka Orjinmo, (c) 2024 Bloomberg LP
