The exponential boost in demand for battery metals, in light of the electric vehicle (EV) market growth, will drive exploration and investment in Africa, the 2018 Investing in African Mining Indaba panel on Energy Metals has determined.
The discussion, live-streamed last month, was a preview of the panel titled ‘Battery Metals: How can Africa position itself to take advantage of the EV revolution?’, which will be held on the main stage of the Mining Indaba, running from February 5 to 8, at the Cape Town International Convention Centre on February 5 at 16:00.
The December webcast included insights from minerals company Cobalt 27 chairperson Anthony Milewski, rare earths and phosphates exploration and mining company Montero Mining president and CEO Dr Tony Harwood, diversified miner Eurasian Resources Group strategic cobalt marketing head Tony Southgate and online market analyst Industrial Minerals lithium market reporter Martim Facada.
Milewski, who will speak at the Mining Indaba, noted that because the EV industry had committed to the lithium-ion battery, investing millions in the establishment of infrastructure to support its use, it had “locked in” demand for the foreseeable future.
Global electric car sales had also increased by 63% in the third quarter of 2017, a 23% increase on second-quarter sales, he pointed out, stating that this was an indication of demand for EVs expanding rapidly.
Milewski stressed that the structural shift in the energy market away from crude oil-based mobility and the subsequent demand for battery metals would see an influx of the “tremendous amounts” of dollars used for exploration and capital expenditure projects.
Facada cited favourable prices for cobalt and lithium at present and expected an increase on the back of EV demand. Additionally, he noted that higher prices would foster increased investment and drive the development of new mines.
Southgate suggested that the expected cobalt prices could benefit copper and nickel operations, which produced 98% of the world’s cobalt supply as a by-product.
With regard to lithium, Harwood highlighted the enriched lithium pegmatite deposits in the Democratic Republic of Congo (DRC), Namibia and Zimbabwe. He noted that Montero chose to operate in Namibia because of its long mining history, the comparatively favourable regulatory environment, its “good” infrastructure and the high quality of its pegmatite deposits.
He and Milewski agreed that, with there being lithium deposits in North and South America, as well as China and Australia, risk, or the perception of risk, would have a greater impact on exploration investment than in the case of cobalt. Further, in terms of risk avoidance, Namibia outshone its African peers.
Facada noted that Zimbabwe accounted for most of Africa’s lithium production (about 7% of global production), but all four panelists – while hoping for the success of the new political dispensation – were sceptical that Zimbabwe would attract exploration investment, given the uncertainty surrounding the country.
Harwood noted that “finding a low-cost project, in the right jurisdiction” would remain vitally important regardless of the expected demand for battery minerals and its resultant impact on commodity prices.
Southgate concluded that, while initial investments would tend toward the DRC, Namibia and, perhaps, Zimbabwe, they would ultimately benefit the continent as a whole, creating economic opportunities for regional service providers and boosting regional activity.