The battle for Africa’s lithium

China is seeking to maintain control of clean-energy supply chains, with Africa playing a crucial role due to its substantial reserves of critical minerals. Africa’s share of global lithium production is expected to increase significantly, with Zimbabwe accounting for most of the rise. Over 90% of Africa’s lithium supply this decade will come from Chinese-affiliated companies. Western firms are exploring lithium deposits in Africa, but face challenges such as oversupply and political risks.

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China’s growing demand for lithium is driving a rush for ‘white gold’ in Africa, particularly in Zimbabwe’s Goromonzi district. China’s desire to maintain dominance of clean energy supply chains and its ownership of key midstream firms has prompted the country to seek out lithium reserves in Africa.

By 2025, Africa is expected to account for 10.6% of global lithium production, with over 90% of the supply coming from Chinese-owned entities. The US and its allies are also interested in Africa’s critical mineral reserves, seeing the continent as part of the solution to weaken China’s grip on the market. However, China remains ahead, with a larger share of imports of minerals and energy.

Western firms are exploring lithium deposits in countries like Ethiopia, Ghana, Namibia, and Rwanda, but Chinese firms are already operating in African countries and acquiring existing assets. There are concerns that Western projects may ultimately end up being acquired by Chinese firms. Western hesitancy is driven by fears of oversupply and price depression, as well as political risks associated with certain African countries. The US’s domestic policies also do not encourage investment in African mines.

China, on the other hand, has already established processing centers in Africa and is likely to invest further in metal processing and refining in the coming years. However, there are concerns that China’s dominance in critical mineral mining may have negative consequences, such as undervaluation of resources, tax avoidance, and human rights abuses.

Source: The Economist