Exploring Southern Africa’s battery mineral potential
Almost all of the emerging green economy’s high-demand minerals are found in abundance in Southern Africa. Indeed, the region dominates both current supply and known reserves for two of them – cobalt (Democratic Republic of the Congo) and manganese (South Africa). Discoveries over the last decade have revealed substantial quantities of other elements in the green mineral treasure chest, notably lithium (Zimbabwe and Namibia) and graphite (Mozambique and Namibia).
These resources imply a mining bonanza as the market for low-carbon technologies, especially battery-powered electric vehicles (EV), grows over the next few years. Cobalt, manganese and graphite are essential catalysts for lithium-ion batteries (LIB) – alongside more widely-abundant nickel – while lithium is an electrolyte. However, it should be noted that only the primary extraction parts of the LIB value chain are located in Southern Africa and there is, as yet, no sign of a battery-manufacturing cluster emerging.
Cobalt and lithium prices have revived in early 2021, suggesting the start of a revival in the EV market after the Covid-induced slowdown. The price of cobalt surged over 60 percent in the four months to late March while the lithium price has doubled over the last six months. Consultancy Fitch expects the immediate recovery in EV sales to be confined to Asia where the consultancy expects an increase of 23.8 percent in 2021 while European and North American markets remain depressed by the pandemic. Nevertheless, it would seem that projections of a 50 percent annual growth in global EV sales through to 2025 are back on track.
Seventy percent of the world’s cobalt supply comes from the Democratic Republic of Congo. Most production (perhaps 90 percent) is no longer sold into the market but through long-term supply contacts between traders like Glencore and big automotive manufacturers (Tesla, BMW, GEM) as well as cell phone-makers (Apple, Samsung). These long-term contracts have been put in place within the last two years in response to concerns about security of cobalt supply.
Cobalt supply risk as well as adverse publicity around the 20 percent or so of DRC production from the artisanal sector (which has been accused of exploiting child labour) have been among the reasons for recent attempts to develop alternative battery chemistries. There are radical alternatives like hydrogen fuel cell technologies – which use platinum group metals (PGMs) as a catalyst – and have excited the interest of South Africa’s PGM miners and government. While LIB and green hydrogen are not necessarily mutually exclusive and it would be foolish to second-guess as yet unknown technological shifts, it does seem that LIB becomes more entrenched as the dominant technology with each passing day. Among other things, investment in recharging infrastructure will at some point be too expensive to reverse. This does however not mean that there will not be significant shifts in LIB sub-technologies although Tesla’s recent attempt to develop a non-cobalt (lithium iron phosphate) alternative is described by Fitch as having turned out to be ‘unpromising’.
Growth in demand for lithium is likely to continue unabated irrespective of shifts in battery sub-technologies. Most lithium has traditionally been produced in the ‘Lithium Triangle’ in Argentina, Chile and Bolivia as well as Australia but recently Zimbabwe has emerged as a jurisdiction of some importance. The Arcadia Mine, developed by Australia-based Prospect resources, east of Harare, is currently near commercial readiness and is said, by the miner, to be the world’s seventh biggest lithium resource. With 2017 expansion of the older Bikita Mine near Bulawayo, Zimbabwe is already the world’s fifth largest producer of lithium. Two further projects (Zulu and Kamvali) have been identified in Zimbabwe and another Australian junior miner, Lepidico, is looking at two deposits in Namibia (the Karibib Project).
Like lithium, graphite is essential to all LIB sub-technologies. No less an authority that Tesla founder Elon Musk has argued that lithium-ion batteries should more correctly be called ‘nickel-graphite’ on account of percentage composition. Graphite is widely mined in a variety of forms with the world’s two biggest producers being China and Turkey. In 2017, yet another Australian junior miner, Syrah Resources, brough a major new graphite mine, Balama, located in Mozambique’s Cabo Delgado province, on-stream.
The resource on which Balama is based is said, by Syrah, to be the largest graphite deposit ever discovered. It is several kilometres in length and more than 200 metres thick. Two other Australian junior miners have been developing other graphite mines in the same area (Montepuez and Ancuabe). The possible impact of the Islamic insurgency on these activities is not known at this point. Syrah did suspend operations at Balama in 2020 due to Covid-19 restrictions.
More revealing of the hurdles to the emergence of a battery manufacturing cluster in Southern Africa is Syrah’s decision to process Mozambiquan graphite, not locally, but in the US. Graphite processing is a notoriously ‘dirty’ industry and the mining company’s choice – which means complying with strict US environmental regulations – tells observers something about its understanding of risk in Cabo Delgado province.
A different set of local processing limitations affect South African manganese production. It is easy to forget that manganese is an LIB input because the price of the metal is almost entirely determined by its use in steel-making (which accounts for 90 percent of production). South Africa holds 78 percent of the world’s manganese reserves and is the largest exporter by some distance. Production has boomed for over a decade with output rising from six million tonnes in 2007 to 17 million tonnes in 2018. Earlier this year the journal Metal Bulletin reported production to be 19 million tonnes for the first 11 months of 2021.
This more-than tripling of South Africa’s manganese output in a decade-and-a-half has resulted in transport bottlenecks necessitating the running the world’s longest train – a four-kilometre long 375 wagon monster – on the line between the Northern Cape manganese fields and Saldanha Bay. But the biggest problem has been smelting capacity which has been devastated by electricity price increases in recent years. In 2021 only Assamang’s Cato Ridge smelter is still standing (South 32’s Metalalloys smelter at Meyerton is on care-and-maintenance) and most manganese production is exported to China as concentrated ore.
The unprecedented boom in demand for green minerals is producing a corresponding surge in mining opportunities in the region. But movement further up the LIB value chain faces formidable hurdles.
About the Author(s)
Leave a comment
The Trade Law Centre (tralac) encourages relevant, topic-related discussion and intelligent debate. By posting comments on our website, you’ll be contributing to ongoing conversations about important trade-related issues for African countries. Before submitting your comment, please take note of our comments policy.