Namibia: Dimensions of the Lithium Opportunity

So much attention on Namibia

The relatively recent oil finds off the coast of Namibia have drawn considerable global attention to this country. Namibia has a population of only around 2,6 million but its territory is vast – spanning nearly 826 000 square kilometres. Another reason for increased focus on this country is the reports of substantial lithium deposits.  

The global lithium opportunity

Lithium is well-recognised as a critical mineral for emission-reduction technologies and is key to the world’s transition to cleaner energy. Lithium-ion batteries are used for the manufacture of electric cars, laptop computers, smart phones, electronic goods and even glass. The world needs it now and demand for lithium will undoubtedly experience strong growth. Expected output for 2023 is almost one million tons. The World Economic Forum predicts that lithium production will reach over three million metric tons by 2030.  

And Africa finds itself blessed with this critical mineral

In Africa, lithium deposits are found in Zimbabwe, Namibia, the DR Congo, Mali and Nigeria. Zimbabwe is by far the most blessed, with experts estimating that the country could potentially meet 20% of world’s demand. It produced 900 metric tons in 2022, and this figure will rise substantially in the coming years. Namibia’s lithium reserves are decidedly smaller, although the full extent of the resource has yet to be determined. One estimation is that lithium exploitation could bring in as much as a million US Dollars per annum for the country.  

Why Namibia is well-positioned to take advantage of its resource

It is generally acknowledged that Namibia is an investor-friendly and resource-friendly country. In the case of mining, it has a long experience as a major world producer of uranium. It also produces a wide range of other mining products such as gold, diamonds, copper, lead and zinc. Mining house executives operating in Namibia report a conducive regulatory environment and sound dealings with government authorities. (A recent ‘positive’ complaint by an investor has been that a sharp increase in competition has slowed regulatory processes a little.)

Namibia has a number of inherent advantages. As a primary asset, it has good transport infrastructure (roads, rail and ports). While it is a water-stressed country, its usage of desalination technology (notably for its uranium industry), has alleviated the issue. It is blessed with abundant sunshine which assists with energy supply to the mines.

The Karibib Project as a pioneering initiative

The Australia-headquartered lithium developer, Lepidico is leading the way with its Karibib Lithium Project. The project comprises two open-pit mines at Rubicon and Helikon 1 which will feed ore to a processing facility to produce lithium concentrate. The concentrate will thereafter be shipped to a chemical conversion plant in Kezad Industrial Park in Abu Dhabi.

Prospect Resources completed a drilling programme in early 2023 at its Omaruru Project, which reportedly produced good results. Andrada Mining has recently started production of lithium concentrate at its Nai-Nais mine. Other lithium mining operations in Namibia include Bitterwasser, Uis and Brandberg. The main areas where the mineral is found are the Damara area of north-central Namibia and the Namaqua region in the south.

  How significant is Namibia’s lithium opportunity likely to be?

The success of Namibia’s lithium find will depend on a number of conditions. In December 2020, the Federal Institute for Geosciences and Natural Resources of Germany in cooperation with the Geological Survey of Namibia produced a comprehensive report titled “Lithium Potential in Namibia – Evaluation of Economic Suitability”. The report made a number of noteworthy conclusions.

Global supply is dominated by Australia. Chile, China, Argentina and Brazil are other major suppliers. Namibia’s potential supply remains small, and there is considerable international competition. Price will be partly determined by quality, and Namibia’s grade appears to be relatively low. There has been a global over-supply of lithium, and this together with a lower-than-expected demand for electric vehicles has helped keep lithium prices low. There is much conjecture relating to future Chinese demand.  Other considerations are the high cost of processing, transport logistics, absence of local markets for lithium-based products, and the energy-intensive and water-intensive nature of the mining operations.

Nevertheless, analysts are expressing the view that lithium prices will appreciate in the longer term and that the opportunity remains valid for Namibia. Namibian production may be relatively small for now, but is still enough to bring substantial benefit to the country. The number of lithium operations has increased considerably over recent years.

The government prioritises beneficiation

The Namibian’s government’s ‘Growth at Home’ policy prioritises local beneficiation of mining production and industrialisation. In June 2023, the authorities followed Zimbabwe’s example in banning the export of unprocessed lithium and other critical metals. (The decision could have been sparked by a mining house that was reportedly exporting large quantities of rare earths under the guise of sending samples for testing.) The shipping of lithium concentrate is permitted. Investors confirm that they will be converting raw lithium and other critical metals to the concentrate level, and have no interest in exporting unprocessed minerals. Full processing locally would appear to be too costly.  

An interesting initiative by mining investors

Companies mining rare earths in Namibia are currently coming together to establish the ‘Rare Earth Alliance Namibia’ which is considering setting up a local rare earths separation plant. This positive initiative is in line with the advancement of industrialisation in the country. Although lithium is not directly concerned in the venture, it could set a precedent for future collaboration between the growing numbers of lithium miners.

The future scenario for lithium mining in Namibia

The pace of developments in Namibia’s lithium mining industry is picking up. A recent event was the acquisition by Askari Metals of Australia of the Namibian company, Green Lithium. It is predicted that lithium output will ramp up from around 2025.

The future is bright for Namibian mining, and for critical minerals in particular. As a CEO of a mining house active in the country declared during a recent mining conference, “Namibia is the best jurisdiction in Africa to mine.”