- Natural resources giants do not have the machinery and the funding to mine their minerals.
- The Lithium mineral is considered a crucial component to facilitate the success of renewable energy technologies.
- In February 2022, a Chinese company, Zhejiang Huayou, acquired controlling rights to Zimbabwe’s Arcadia mine in a US$422 million deal, with many analysts concerned there will be few national and local benefits to the country.
For decades, Africa has not fully capitalized on developing its natural wealth even as the world adapts to new changes increasing demand for its resources.
When the manufacturing of cars gained ground in the late 20th century, African leaders were not fully aware of the potential of producing aluminium, magnesium, copper, and carbon fibres in the now intensive industry and its impact on the African economies.
In the early 2000s, the adoption of mobile phones was another development that went away, yet again, without coltan producing countries such as Rwanda, the Democratic Republic of Congo and Nigeria fully benefitting through the resource they housed.
Read: Zero-emissions electric bikes target replacing Kenya’s petrol motorcycles
Ceding mining rights to foreign companies
One would ask, why have these countries not fully benefitted when they have been mining these minerals all along? One of the biggest reasons this is happening is that they have been selling the controlling rights to excavate these minerals to foreign companies!
It can be explained that these natural resources giants do not have the machinery and the funding to mine these minerals. But again, if they realized who stands to benefit most from the mining, then probably they would get better deals or find alternative sources of funding to acquire the machinery.
As oil prices continue to rise, attributed to the intensifying fight against climate change by 2030 and the current war between Russia and Ukraine, the adoption of electric vehicles appears inevitable. China has seen the electric power locomotives’ potential and is looking to ‘steal’ into lithium mining, the principal ore in the manufacture of electric vehicles’ batteries.
In February 2022, a Chinese company, Zhejiang Huayou, acquired controlling rights to Zimbabwe’s Arcadia mine in a US$422 million deal, with many analysts concerned there will be few national and local benefits to the country.
The Chinese firm looks to be buying future stakes in electric vehicle production and Zimbabwean leaders are watching as it happens!
This is one scenario in many where foreign investors aim to pound on a potentially explosive lithium market. Other countries with lithium reserves in Africa are Ghana, Namibia, Mali and the Democratic Republic of Congo.
Another Chinese firm, Xinfeng Investments, is obtaining the necessary permits to construct Namibia’s first lithium mine in the Erongo Region.
2021 has witnessed dozens of African lithium mining companies acquisitions by foreign investors. The acquisitions in Ghana include:
Piedmont Lithium subscribed for US$15 million shares in a conditional binding agreement with IronRidge Resources to fully fund the Ghana-based Ewoyaa lithium project to Lithium production in July last year.
In November last year, Australian mineral resources company Atlantic Lithium received an exploration license for its Cape Coast project.
The Democratic Republic of Congo also falls under this umbrella of failing to capitalize on the trending demand for particular natural resources. The DRC is home to significant deposits of hard-rock lithium. According to Industry Literature, lithium production in DRC is set to begin as early as 2023. Civil war, poor governance and illegal smuggling of minerals have distracted the country from mining lithium, and they might realize its potential a little too late.
The adoption of electric vehicles will lead to the increased demand for battery power between 1 and 6TWh, consequently the demand for lithium.
The global electric cars production grew to 10.9 million vehicles in 2020, three million more than in the previous year, highlighting the adoption’s potential. China leads in the number of electric vehicles on the road (5 million cars), followed by the United States with 1.77 million. China targets 20 per cent of electric vehicles production by 2025, while France has a deadline to convert all vehicle sales to be EV or hybrid-electric by 2040. The United Kingdom has bull-eyed zero greenhouse emissions in domestic output by 2050, to mention but a few.
Generally, the electric cars market is estimated to grow 27 per cent per annum globally until 2030 and could grow up to forty-fold by 2040. These developments show the explosive potential that lithium mining holds to the African economy even as Zimbabwe sells controlling rights to China.
The market further extends locally to Kenya, Egypt and South Africa, who are driving the adoption of electric vehicles in the continent.
South Africa has the most developed e-mobility market in Africa, with Statista counting about 1,000 electric vehicles (EVs) in 2022.
In Kenya, OPIBUS and Fika Mobility, and several other e-mobility firms are driving the adoption of electric vehicles and bikes. Currently, there are approximately 350 cars on the roads, with the country targeting to convert all cars to electric vehicles to reduce air pollution.
Read: OPIBUS challenges Kenya’s electricity generation with EV production increasing
OPIBUS plans to extend its services across Africa by the end of 2023. The company has the vision to lower costs and simplify the deployment of EV vehicles across Africa. At the start of COP26, OPIBUS opened a funding round closure that raised US$7.5 million for the company.
Over the last five years, OPIBUS has also been converting petrol and diesel engines to electric powered ones, proving a big challenge as it costs roughly US$39,000 for the conversion.
President Abdel Fattah El Sisi said on January 21 that his government is in talks with two Chinese companies to partner with El Nasr Automotive to produce locally assembled electric vehicles by 2023. General Motors are willing to invest approximately US$35 million in Egypt by 2025.
Alternative financing sources for mining in Africa
Instead of selling mining rights to foreigners, African governments could look for alternative funding sources to attain 100 per cent of the profits accrued from natural mining resources.
Leveraging on the diaspora community. The African diaspora community contributes to a country’s economy through Foreign Direct Investments, transnational entrepreneurship, and the sharing of ideas that could boost African miners to acquire the machinery and knowledge they need to excavate these game-changing natural resources.
The World Bank projected countries to receive the highest remittances in Africa, with Nigeria (17.6 million), Ghana (4.5 billion) and Kenya (3.7 billion) topping the list. In 2019, the Reserve Bank of Zimbabwe estimated diaspora remittances at US$1.4 billion with more significant upside potential.
Seed Funding. The continent and the world are growing fond of supporting economically viable ideas in Africa. Countless startups have gained footing through seed funding, and the same can be applied to the mining of natural resources on the continent. Startups raised more than US$5 billion in seed funding in 2021 alone.
Loans from the African Development Bank and other public institutions. The African Development Bank and other public institutions can offer loans to propel the mining of these African resources without necessarily needing the help of private companies and foreign countries.
The adoption of electric vehicles will increase the electricity demand, encouraging tapping into renewable sources of energy such as hydropower and wind.
Most of the already existing electric buses consume an average power of 225 kilowatts and can reach a top speed of 85 kilometres per hour. The powered battery has a capacity of 121 kilowatts an hour and takes a maximum of 1.5 hours to charge.
One battery can take the car through 120 km before it calls for a recharge. The bus will significantly lower the cost of importing fully built vehicles and reduce maintenance services by 80 per cent, compared to a diesel bus.
The current electric grid in Africa would find it challenging to survive the pressure created by the wide adoption of electric vehicles. Countries would have to boost their national electricity production.
African Energy outlook estimates Africa’s electricity output at 320 GigaWatts by 2040. If 1 million cars in the continent are converted into electric, each consuming 225 kilowatts, the electric consumption will stand at 225 gigawatts, exerting pressure on the electric grid.
The adoption of electric vehicles would also reduce car imports, saving African countries’ revenues.
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