Sunday, 19 May 2024

In Business

The Economics of Lithium Rich Countries in Africa

The Economics of Lithium rich countries in Africa was seen in Zimbabwe’s recent ban on raw Lithium to protect its US$200 billion worth of raw lithium, as it seeks to lock the value chain into the local economy.

The southern African country holds some of the world's largest reserves of hard rock lithium, a vital mineral in the production of clean energy technologies, Reuters reported.

Lithium is a key component in the production of batteries used in electric vehicles (EVs) and other electronic devices. There are several countries in Africa that have significant reserves of lithium:

Zimbabwe: The country is believed to have the second-largest lithium reserves in the world, with an estimated 18 million tonnes of lithium ore. Lithium reserves have been found in several locations in Zimbabwe, but the most significant deposits are in the Bikita area, located in the Masvingo province in southern Zimbabwe.

Zimbabwe’s Lithium of 18 million tonnes of lithium ore at $13,000/metric tonne would be worth approximately $234 billion.

The Bikita deposit is the largest known lithium deposit in Zimbabwe and one of the largest lithium deposits in the world. The deposit is estimated to contain around 11 million tonnes of lithium ore, with a grade of around 1.4%.

Other significant lithium deposits have been found in the Fort Rixon area, located in the Matabeleland North province, as well as in the Kamativi and Goromonzi areas. The lithium resources in these areas are still being evaluated and their exact location may be different from what is currently known.

Democratic Republic of Congo: The DRC is thought to have the third-largest lithium reserves in the world, with an estimated 8 million tonnes of lithium ore. Lithium reserves have been found in several locations in the Democratic Republic of Congo (DRC), but the most significant deposits are in the Katanga province, located in the southern part of the country.

Democratic Republic of Congo’s 8 million tonnes of lithium ore at $13,000/metric tonne would be worth approximately $104 billion.

The Katanga province is home to several large copper and cobalt mines, which also contain lithium as a byproduct. Other significant lithium deposits have been found in the Manono-Kitotolo area, located in the Lualaba province, and in the Kipushi area, located in the Haut-Katanga province.

The lithium resources in these areas are still being evaluated and their exact location may be different from what is currently known. It's worth noting that, the DRC's mining sector is currently facing some challenges such as lack of infrastructure, poor governance, and security issues, which make it difficult for mining companies to extract these resources, in addition to the fact that the DRC is a politically unstable country, and it's important for companies and investors to consider these risks before investing in the mining sector in DRC.

Madagascar: Madagascar is believed to have large lithium reserves, with an estimated 7 million tonnes of lithium ore. Madagascar’s 7 million tonnes of lithium ore at $13,000/metric tonne would be worth approximately $91 billion.

Gabon: Gabon has a reserves of lithium ore of around 6 million tonnes. Gabon’s 6 million tonnes of lithium ore at $13,000/metric tonne would be worth approximately $78 billion.

Namibia: Namibia has a reserves of lithium ore of around 3 million tonnes. Namibia’s 3 million tonnes of lithium ore at $13,000/metric tonne would be worth approximately $39 billion.

Tanzania: Tanzania is believed to have lithium reserves of around 1.5 million tonnes. Tanzania’s 1.5 million tonnes of lithium ore at $13,000/metric tonne would be worth approximately $19.5 billion.

Ghana: Ghana has a reserves of lithium ore of around 1 million tonnes. Ghana’s 1 million tonnes of lithium ore at $13,000/metric tonne would be worth approximately $13 billion.

It's worth noting that these are approximate figures and actual reserves may be different. It's also worth noting that having reserves does not necessarily mean that a country is currently mining lithium, they may have the potential to start mining in the future.

It's also worth noting that Lithium mining is a complex process and is often not as simple as extracting the ore, as it requires a lot of water and energy to produce lithium hydroxide and carbonate, which are the two most common lithium compounds used in batteries. Therefore, countries with reserves will need to invest in the necessary infrastructure and resources to extract the lithium and process it into a usable form.

It is worth noting that these are approximate figures and actual values may be different based on the cost of mining and extracting the lithium, market fluctuations in the price of lithium, and other factors. It is also worth noting that these estimates are based on the value of lithium ore, and not the final product, lithium hydroxide or lithium carbonate, which are used in EV batteries. The process of converting the ore into these compounds will add additional costs and may affect the overall value of the reserves.

There are several economic development and investment models that countries like Zimbabwe, Democratic Republic of Congo (DRC), Madagascar, Gabon, Namibia, Tanzania and Ghana could potentially use to collaborate in the extraction and manufacturing of lithium and related metal resources for export:

Joint venture partnerships: One option for collaboration would be for the countries to form joint venture partnerships with international mining companies or EV manufacturers. This would provide the necessary expertise and funding for the extraction and processing of the lithium, as well as for the manufacturing of EV components.

Public-private partnerships: Another option would be for the countries to establish public-private partnerships (PPPs) to develop the lithium mining and EV manufacturing industries. PPPs can involve the government providing funding and support for the development of infrastructure and regulations, while private companies invest in the extraction, processing and manufacturing of lithium and EV components.

Investment in infrastructure: The countries could also collaborate to invest in the necessary infrastructure such as transportation, power supply and technology to support the lithium mining and EV manufacturing industries.

Investment in research and development: Investing in research and development (R&D) to improve lithium extraction and processing methods, as well as developing new EV technologies, could also be a way for the countries to collaborate.

Regional collaboration: The countries could also collaborate at a regional level through the establishment of a regional lithium mining and EV manufacturing hub. This would involve the creation of a shared infrastructure and resources, as well as the sharing of expertise and technology.

Government support: The governments of these countries could provide support to attract foreign direct investments (FDI) in the form of tax incentives, subsidies and other financial incentives, as well as providing regulatory support to encourage the development of the lithium mining and EV manufacturing industries.

For these collaborations to be successful, it will be important for the countries to work together to develop a coordinated strategy for the extraction, processing, and manufacturing of lithium and related metal resources. This could include sharing expertise, resources and technology, as well as coordinating regulations, laws, and policies to support the industry. Additionally, it will be important for the collaboration to be inclusive and to ensure that the benefits of the mining and manufacturing industry are shared equitably among the countries involved, as well as with the local communities.

There are several ways that local communities in Zimbabwe, Democratic Republic of Congo (DRC), Madagascar, Gabon, Namibia, Tanzania, and Ghana can benefit from the mining of lithium:

Job creation: The mining of lithium can create jobs for local communities, both directly in the mining operations and indirectly in related industries such as transportation and construction.

Economic development: The mining of lithium can also lead to economic development in local communities through the creation of new businesses and opportunities for trade and commerce.

Income generation: Local communities can also benefit from income generated through royalties and other forms of revenue sharing from the mining operations.

Infrastructure development: The mining of lithium can also lead to the development of infrastructure in local communities, such as roads, power supply and housing.

Education and training: Mining companies can also provide education and training programs to help local communities develop the necessary skills to participate in the mining industry, as well as in other related industries.

Community development programs: Mining companies can also support community development programs, such as health and sanitation programs, education, and other social projects that can improve the lives of local communities.

Environmental protection: The mining companies can also invest in environmental protection programs to mitigate the negative impacts of mining on the environment, such as reforestation, water management, and waste management.

Source: Reuters, Behaviour Report