China’s Strategic Move to Secure Future Lithium Supplies

Chinese miners and refiners are leading a dramatic increase in African lithium production, despite concerns about a potential market glut. Africa is projected to contribute nearly 11% of the global lithium supply this year, a significant rise from negligible levels at the start of the decade. This share is expected to exceed 14% by 2028, according to S&P Global Commodity Insights.

The surge in lithium prices during 2021 and 2022 spurred substantial investment from Chinese companies into African lithium production. However, the market has since seen prices drop by over 80% due to an increase in supply and slower-than-expected sales of electric vehicles. Despite a predicted global surplus this year, China, which dominates the global lithium chemicals market, continues to expand its refining capacity and rely more on international sources. Claudia Cook, an analyst at Benchmark Mineral Intelligence, notes that Africa is increasingly filling the gap left by growing resistance to Chinese involvement in Western lithium projects.

Major Investments and Future Developments in African Lithium

Zimbabwe, accounting for more than two-thirds of Africa’s lithium output, has attracted substantial investment from Chinese firms such as Zhejiang Huayou Cobalt Co., Sinomine Resources Group Co., and Chengxin Group Co. These companies have invested billions in developing mines and processing facilities. Additionally, Chinese-backed projects are underway in Mali, Namibia, and Nigeria.

According to Lukasz Bednarski, S&P’s principal research analyst for lithium and battery metals, 15 new or expanded mines across Africa are expected to start production by 2030. Most of these projects are considered sustainable even at current prices. The increase in capacity is set to coincide with a forecasted return to a market deficit after a peak global surplus in 2027, as reported by Benchmark Mineral Intelligence.

While Zimbabwe’s production is relatively transparent due to industrial operations, supply from countries like Nigeria, which has traditionally exported lithium ore extracted with rudimentary methods, is more challenging to track. Nigeria was the second-largest source of African lithium over the past year and a half. The country recently opened its first lithium processing facility and has several China-backed projects in development, aiming to regulate the trade and boost revenue.

Western Companies and Future Supply Dynamics

Western companies are also investing in African lithium. Atlantic Lithium Ltd., based in Sydney, is establishing Ghana’s first lithium mine, while Andrada Mining Ltd. and Tantalex Lithium Resources Corp. are developing projects in Namibia and the Democratic Republic of Congo, respectively. Additionally, ventures led by British businessman Algy Cluff and Australian entrepreneur Hugh Morgan are working to produce significant lithium volumes in Zimbabwe and Nigeria.

Despite Australia, Chile, and China accounting for about 70% of global lithium supply this year, African mines are projected to reduce their combined share to just over 50% by the end of the decade. This shift highlights a broader trend toward diversifying lithium production sources, as noted by Claudia Cook of Benchmark Mineral Intelligence.

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