Demand for battery metals will drive African exploration, investment

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Growth in the electric vehicle (EV) market will boost demand for battery metals exponentially, driving exploration and investment in Africa.

This was discussed during a live-streamed Mining Indaba panel on energy metals in which Cobalt 27 chairperson Anthony Milewski, Montero president and CEO Dr Tony Harwood, Eurasian Resources Group (ERG) strategic cobalt marketing head Tony Southgate and Industrial Minerals lithium market reporter Martim Facada participated.

Milewski noted that the EV industry had committed to the lithium-ion battery, investing millions in the establishment of infrastructure, which has “locked in” demand for the foreseeable future.

He also pointed out that global EV sales had increased by 63% in the third quarter of this year, an indication that demand for EVs is expanding rapidly.

The prices for cobalt and lithium are favourable and expected to increase on the back of growing EV demand. Facada noted that higher prices would foster increased investment and drive the development of new mines.

Southgate added that the current and expected cobalt prices could also benefit copper and nickel operations, as 98% of cobalt is produced as a byproduct of these operations.

With regard to lithium, Harwood explained that there are 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 “good” deposits.

He and Milewski agreed that, since there are lithium deposits in North and South America, 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 currently accounts for most of Africa’s lithium production (about 7% of global production), but all four panelists –  while hoping for the success of the new dispensation – were skeptical that Zimbabwe would attract exploration investment, given the uncertainty surrounding the country.

Harwood noted that “finding a low-cost project in the right jurisdiction” is still vitally important regardless of the expected demand for battery minerals and its resultant impact on commodity prices.

Southgate concluded that while investments in Africa would initially be made in the DRC, Namibia and perhaps Zimbabwe, they would ultimately benefit Africa as a whole, creating economic opportunities for regional service providers and boosting regional activity.