A spike in lithium costs by way of 2021 and 2022 fueled a wave of funding by Chinese language corporations in African manufacturing. The steel has since plunged greater than 80% after provide elevated whereas gross sales of electrical automobiles lag expectations.
Regardless of an anticipated world manufacturing surplus this yr, China — which makes many of the world’s lithium chemical substances — continues to develop 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 well-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 Co., Sinomine Sources Group Co. and Chengxin Group Co., have spent billions of {dollars} to fee mines and processing crops. Firms from China or with Chinese language backing are additionally creating tasks in Mali, Namibia and Nigeria.
Throughout Africa, 15 mines which might be below growth or being expanded are as a result of be producing by 2030, based on 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 vital progress within the final three years,” Bednarski mentioned.
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, based on Benchmark.
Whereas manufacturing from Zimbabwe is extra clear because of the presence of commercial mines, provide from nations like Nigeria – which till now has exported lithium ore that’s been extracted with rudimentary instruments – is tougher to trace. That nation was the second-biggest supply of African lithium throughout the previous yr and a half, mentioned Thomas Matthews, battery metals analyst at CRU Group.
Greater than half of Africa’s manufacturing final yr got here from hand-dug or small-scale exercise, based on Matthews. That’s altering although, with “progress in output from industrial operations anticipated to eclipse the casual exercise,” he mentioned.
Nigeria opened its first lithium processing facility in Might and has a number of extra China-backed tasks below growth, as the federal government seeks to manage the commerce and maximize income.
Low-grade materials from Africa made up greater than 1 / 4 of all China’s lithium imports on a steel contained foundation throughout the first half of this yr, Matthews mentioned.
Western corporations are additionally seeking to faucet African lithium. Sydney-registered Atlantic Lithium Ltd. 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 Ltd. and Canada’s Tantalex Lithium Sources Corp. are creating tasks in Namibia and Democratic Republic of Congo respectively.
Firms belonging to Algy Cluff – a British businessman finest identified for serving to pioneer the UK’s offshore oil and gasoline trade 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 ($7.1 billion) 20 years in the past – are additionally aiming to supply vital volumes of lithium in Zimbabwe and Nigeria.
Whereas Australia, Chile and China are anticipated to make up about 70% of whole provide this yr, African mines will assist scale back their share to only over half by the last decade’s finish, based on 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.
(By William Clowes)