A KEY theme of this month’s Investing in African Mining Indaba in Cape Town was Africa’s role in the energy transition.
There’s no doubt it has the minerals to contribute, but it’s been slower to attract investment, particularly in lithium.
According to JP Morgan, Africa accounted for just 5,000 tonnes of lithium carbonate equivalent (LCE) supply in each of the past two years, with that number set to remain largely unchanged until mid-decade.
Rapid growth in the latter part of this decade should see LCE production from Africa reach 206,000t, leapfrogging the US and Canada to be the world’s fifth-largest producer behind Australia, China, Argentina and Chile.
Its lithium supply market share is forecast to increase from 1 percent in 2022 to 9 percent in 2030.
A key contributor to Africa’s lithium production growth will be Leo Lithium and Ganfeng Lithium’s Goulamina mine in Mali.
Goulamina is under construction and is set for first production by mid-2024, before ramping up to full production of more than 500,000tpa of spodumene by the end of next year.
The other major lithium mine in Africa will be Manono in the Democratic Republic of Congo, which is the world’s largest hard rock deposit.
While under an ownership cloud, it is more a matter of when, not if, the massive mine gets developed.
Other smaller advanced projects include Atlantic Lithium and Piedmont Lithium’s Ewoyaa in Ghana and Kodal Minerals’ Bougouni in Mali, while Askari Minerals and Lepidico have projects in Namibia.
The other contenders are all in Zimbabwe, which recently banned the export of unprocessed lithium ore, forcing miners to move processing capacity in-country.
‘Africa hosts several large-scale resources and its proximity to the European market and cost structure present as opportunities; however, jurisdictional risk and ESG controls must be considered,’ Canaccord Genuity analysts said recently.
Risks aside, everyone agrees that the lithium will be required.
Commodity Discovery Fund’s Willem Middelkoop told the 121 Mining Investment Cape Town event that 72 new lithium mines would be needed by 2035 to meet forecast demand.
‘That can’t be done,’ he said.
‘If you have a great project in an iffy place, it’s still needed.
‘Even the iffy places will see development.’
Leo managing director Simon Hay said the OEMs had changed their views since 2019 given the shortage of lithium.
‘They realise that they have to change their procurement models,’ he said this week.
‘You can’t just pick up the phone and buy lithium, you’ve got to take a long-term view. And there’s so much investment needed.’
While Western lithium explorers and miners have been slow to catch on to Africa’s potential, the Chinese have been heavily investing.
Ganfeng bought 50 percent of Leo’s Goulamina in 2021.
AVZ Minerals sold 24 percent of Manono to Suzhou CATH Energy Technologies for $240 million last year, though ownership of that project is now in question with Chinese major Zijin Mining entering the fray.
Last year, Prospect Resources sold its 87 percent-owned Arcadia lithium project in Zimbabwe to Zhejiang Huayou Cobalt Co for $377.8 million in cash.
Only last month, AIM-listed Kodal Minerals secured $117.75 million in funding from Hainan Mining Co for Bougouni.
‘We didn’t see deals like that before – it’s extraordinary,’ SP Angel analyst John Meyer said at 121.
Resources entrepreneur Robert Friedland says Africa is key to decarbonisation.
‘Africa is going to make or break the evolution of the human species,’ he told Mining Indaba.
‘It is absolutely impossible to dream about an energy transition without African resources and any mining company that is too brain-dead to understand that should be shot in the head and put out of business.’
(MiningNews.net)
