Lithium could power economy
New commodity market for Nam
What was once considered a niche mineral is now a critical component for technologies and equipment used to combat climate change. Namibia is under-explored in the lithium space, but since 2022 the country has seen a major increase in exploration activity as the scramble for base and precious metals related to renewable energy gained traction, according to a report by Simonis Storm.
Namibia’s lithium industry could be worth up to N$13.9 billion or 6.7% of the country’s gross domestic product (GDP) per year and could pump up to N$4.6 billion into government coffers in taxes and royalties annually.The revenue generated by the local lithium sector for the government would be higher than that of any other commodity mining operations in Namibia, Simonis Storm (SS) estimates in its report on the light metal and its significance for the country.
Lithium plays a key role in the world’s green energy drive because it is a key component in the rechargeable batteries that power electric vehicles and store energy generated by renewable sources such as solar and wind.
According to Investing.com, the battery thematic is currently one of the hottest among investors as they bet on a price supercycle created by the world’s shift towards electric vehicles and renewable energy.
The surge in investor interest is also due to government pledges to reach net zero emissions of greenhouse gases by the middle of the century. That pledge alone will radically increase demand of battery metals, the online investor news site reports.
“It’s a gold rush on steroids,” Investing.com quotes the managing director of Benchmark Mineral Intelligence, Simon Moores.
Investor rush
Investing.com refers to Morningstar Inc. data, which states that 13 thematic funds focused exclusively on battery technologies and metals have been created in the past year. There are now 28 funds globally in this thematic from which investors can choose, according to the website.
The Group of Seven (G7) – the United States, the United Kingdom, Germany, Japan, Italy, Canada and the European Union – recently came up with a Five-Point Action Plan for Critical Minerals Security, which will be implemented with the help of the International Energy Agency (IEA).
In the plan, the G7 emphasised the increasing significance of critical minerals in the transition towards clean energy and the importance of avoiding economic and security hazards caused by vulnerable supply chains, monopolies, and the insufficient diversification of critical mineral suppliers.
New mines
The G7 also committed to boost up the development of new mines and supply chains for critical minerals in a “responsible manner that promotes transparency and traceability to meet the rising demand”.
The G7 said it will explore ways to cooperatively support the acquisition of critical minerals as competition for these scarce resources become more intense.
According to the online news site Tech in Africa, the continent has garnered significant attention in this scenario as it boasts one of the world's largest critical mineral reserves.
In addition to the Democratic Republic of Congo, other key producing nations such as Zimbabwe, Mali and South Africa, as well as emerging markets like Namibia, Nigeria, and others, present numerous investment and mineral development opportunities, the website states.
Another online news site, Energy Capital & Power, several projects underway in Namibia could position the country as a moderate to large-scale producer.
Exploration boom
SS says it is important to note that Namibia’s estimated lithium reserves have grade concentrates far below the global standard of 6% and that the country’s lithium exports will fetch a lower global price per tonne.
The analysts expect lithium mining production in Namibia to be in full swing from 2025.
SS says there has been a significant increase in lithium exploration in Namibia.
New investors have taken over two previously operational lithium mines, with plans to restart their operations. If current exploration efforts result in successful production, Namibia will effectively be introducing a new commodity market to its local mining industry by resuming lithium mining after a hiatus since 1998, SS says.
Lithium deposits are not a new discovery for local mining companies in Namibia, according to the analysts.
“Local operators knew about lithium deposits present in their mines, but it was never-mined due to a lack of demand in earlier years – until now.
“With international mining companies now scrambling for lithium amongst other base and precious metals in response to higher demand for renewable energy equipment and batteries, there is renewed interest in lithium in Namibia.
“Therefore, if current exploration realises in production, Namibia will be adding a whole new commodity market to its local mining industry,” SS says.
Major players
Two of the biggest and most progressed lithium operations in Namibia include Australia’s Lepidico at Karibib and Guernsey’s Andrada mine operations at Uis.
Karibib is fully permitted for the re-development of two open pit mines at Rubicon and Helikon 1 south of Karibib. Drilling results at Uis from Andrada’s tin mine surpassed expectations in terms of lithium grades and reinforced their belief that Uis hosts one of the largest lithium resource deposits globally, SS says.
Namibian lithium mining data dates back as early as 1939 and lasted until 1998, according to SS.
Lithium production never exceeded 12 000 tonnes per annum – its peak reached in 1971. Mining activities in Namibia ceased due to product quality issues and low global demand.
Between 1939 and 1950, lepidolite was the main lithium mineral mined in Namibia until petalite production commenced in 1947 and dominated overall lithium production until 1998.
Except for 500 tonnes of lithium exported in 2018, Namibia has no production or export data on lithium since Independence, SS says.
Xinfeng Investments (Pty) Ltd, a Namibian Company which is a subsidiary company of Tangshan Xinfeng Lithium Industry, is mining lithium at Uis.
Xingfeng Investments said it will have to export lithium ore every month for another three years to cover mining operations, create cash flow, and allow its planned N$500 million lithium processing factory, with a desalination plant, to take off.
Global market
The global lithium market was valued at US$6.8 billion in 2021 and is projected to grow at a compound annual growth rate (CAGR) of 12% from 2022 to 2030, SS says.
“McKinsey Battery Insights projects 30% annual growth in the entire lithium market (from mining through to recycling) between 2022 and 2030, reaching a market size of US$400 billion. This implies that the industry could surge in size over the next seven years.”
Prior to 2023, global supply of lithium satisfied demand for the production of electric vehicles (EVs), consumer goods like toys, wireless headphones, small and large appliances, mobile phones and handheld power tools, as well as batteries.
“However, it is expected for global lithium supply to be outstripped by rising demand as early as 2024, while others only expect a deficit in 2026. Going forward, most of the global demand for lithium is likely to originate from the battery market, followed by the EV space and consumer goods,” SS says.
Lithium’s outlook is not set in stone to continue growing exponentially in the long run as alternatives have been discovered and so threaten the commodity’s outlook, the analysts caution.
There exist multiple substitutes for lithium that are more affordable, efficient, and environmentally friendly than lithium. These include solid-state batteries, aqueous magnesium batteries, sodium-based batteries, seawater batteries, sodium sulfur batteries, and manganese hydrogen batteries.
Nevertheless, all these battery options are still in the experimental phase and have yet to be widely adopted commercially, SS says.