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What Africa stands to gain from a ban on export of raw minerals

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The recent announcement of a US$500 million lithium refining facility in Ghana is the latest sign that moves by African nations to restrict the flow of unprocessed minerals from the continent may be bearing fruit.

Ghana has known lithium reserves of some 35 million tons. Earlier this year, the country passed its Green Minerals Policy, which, amongst other things, restricts raw mineral exports.

A consortium led by CAA Mining Ltd, Luxembourg-based Livista Energy and Livista’s local subsidiary, Livista Ghana Ltd. has secured a 200-acre plot for the project, according to mining news publisher, Africa Mining Market.

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CAA Mining’s CEO expects the facility to open in 2026, according to Africa Mining Market with the establishment of the refinery linked to a license to explore for further lithium deposits.

Chikohora pointed to an industrial boom in the country once the refinery opened, which would add to jobs in mining and refining.

“There will battery producing companies, vehicle assembly plants and many other job opportunities,” said the UK-based mining executive, who has deep experience in the mining industry in West Africa as well as in Zimbabwe.

In July, Prospect Lithium Zimbabwe, a subsidiary of the Chinese mining company Zhejiang Huayou Cobalt, inaugurated a US$300 million lithium processing plant in Zimbabwe. The facility boasts the capacity to process 4.5 million metric tons of hard rock lithium into concentrate for export annually.

Chikohora expects lithium from Zimbabwe to be amongst the feedstock refined in Ghana. Other regional producers include the Democratic Republic of Congo, Sierra Leone, Mali, Namibia and South Africa.

“There are only two places where lithium is refined in the world, and that is China and the US. In Africa, there is no refinery for lithium,” Chikohora said.

The Ghana refinery is to be powered by locally-secured natural gas.

The world’s top two producers, Australia and Peru, both export all their raw lithium.

Despite being endowed with rich mineral resources, African countries have not experienced the anticipated economic transformation that those resources promise.

A 2021 study, titled “Review of Zambia’s Potential for More Value Addition to the Downstream Copper Chain,” poignantly illustrates this reality. Zambia, the eighth-largest global producer of copper in 2022, according to GlobalData, predominantly exports “stage 1” copper.

In terms of value, stage 1 copper fetches approximately US$5/kg, whereas stage 2 commands a significantly higher US$30/kg. Stage 3 copper, employed in applications like inductor coils for music speakers, commands a premium price of about US $150/kg.

“In other words, the finished product at the latest stage is sold at a price that is 25.86 times greater than the stage 1 refined copper. By focusing on refined copper exclusively, Zambia could potentially earn a staggering $524.35 billion USD,” the researchers outlined in the review report, published in the Journal of Natural and Applied Sciences.

Market research and consulting firm Roskill estimates that the demand for lithium-ion batteries will surge a remarkable 83% by 2027, increasing demand for lithium hydroxide, a vital compound in rechargeable batteries, by 55% over the same period.

While the spotlight is currently on lithium, the expansion of processing facilities encompasses a spectrum of minerals. The Wall Street Journal reports that nickel, cobalt, and graphite, among others, are also targeted in this new wave of establishing local processing facilities.

Australian mining behemoth BHP, in collaboration with US-based Lifezone Metals, is on course to establish a nickel processing plant in Tanzania by 2026. Chris Showalter, CEO of Lifezone Metals overseeing on-ground operations at the Kabanga Nickel Project, revealed in an interview with the Wall Street Journal that the facility will supply battery-grade nickel to the global market, upon completion.

Further afield, Vision Blue Resources, a London-based mining company, through its African subsidiary NextSource Materials, is set to inaugurate a graphite processing facility in Mauritius. This facility, part of NextSource Materials’ broader plans, aims to construct multiple Battery Anode Facilities (BAFs) capable of producing anode materials for use in lithium-ion batteries for electric vehicle applications.

With an eye on the future, more mineral processing facilities are on the horizon, with Mozambique, South Africa, Namibia, and the DRC poised to witness the most activity.

A report by the World Bank titled ‘Africa’s Resource Future’ sheds light on the economic potential of Africa’s resources, indicating that these nations currently capture only about 40% of the revenue they could potentially derive from natural resources.

“Maximizing government revenues in the form of royalties and taxes paid by private natural resource industries, alongside attracting new investment, would offer a double dividend for countries,” James Cust, a senior economist and co-editor of the report by the World Bank, explained.

 

Source: news24

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