African mining – outstanding geology or corruption?
There is an urgent need to refill the mining project pipeline of African countries with early stage exploration projects of all shapes and sizes.
Those are the words of Martin Potts, Director of Mining Research at finnCap as he released his latest research notes looking at the rankings of the various countries in Africa that have a significant exposure to mining.
In the notes, finnCap takes a look at the 25 (roughly) countries in Africa that host significant operating mines or have advanced exploration projects. The report looks at the Transparency International corruption ranking, but modifies it for geological potential and then current security risk.
So, who ranks where?
Ghana, Botswana, Namibia, Lesotho and Senegal – all sit highly in the top five. To drop a few names, Kennedy Ventures (Tantalite Valley tantalum mine) and Weatherley (Tschudi copper mine) operate in Namibia, while Firestone Diamonds (Liqhobong diamond mine) and Gem Diamonds (Lesteng diamond mine) operate in Lesotho.
Turn the scale upside down and the bottom five countries are Eritrea, Kenya, Zimbabwe, Guniea and Angola. Once again, to look at some of the most notable names across those countries – Avocet (Tri-K gold project) in Guinea, ASA Resource Group (Freda Rebecca gold mine and Bindura nickel mine) and Caledonian (Blanket gold mine) in Zimbabwe and Base Resources (Kwale mineral sands mine in Kenya.
“Looking at these results, it appears that the Canadians value geology highly, whereas the reality is that for investors the ability to successfully operate a mine in any particular country depends much more on the degree of corruption and insecurity,” says Potts.
The underlying question for investors is the risk/reward balance. Does outstanding geology beat corruption and security issues including but not limited to the threat of the radical Muslim insurgencies? This mostly comes down to the quality of company management and their in-country experience. Interestingly, many of the higher scoring countries were once part of the British Empire.”
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British Lithium Pressured Due To Calls for Electric Cars
The British demand for lithium is set to reach 75,000 tonnes by 2035 as the government works towards their ban on the sale of high-polluting diesel and petrol vehicles within the UK. This comes as automakers worldwide continue to insist on the benefits electric vehicles will have on slowing the rate of climate change.
It is estimated that the UK will require 50,000-60,000 MT of lithium carbonate a year by 2035 for battery production to satisfy government needs. This is assuming production remains at 1.2 million vehicles per year, and the amount of lithium required does not increase.
British Lithium, which hopes to begin constructing a quarry to produce 20,000 MT of lithium carbonate a year in a $400 million investment, are not without competitors, both within the UK and abroad.
Competition For Lithium Rises In Europe
After only five years after its initial launch, Cornish Lithium is setting its sights on becoming a UK powerhouse in mining lithium, aiming to begin commercial production in under four years. Jeremy Wrathall, a former investment banker and current managing director of Cornish Lithium, had the future in mind when founding the company.
“In 2016, I started to think about the electric vehicle revolution and what that would mean for metal demand, and I started to think about lithium,” he said in an interview with AFP. “A friend of mine mentioned lithium being identified in Cornwall, and I just wondered if that was a sort of unrecognised thing in the UK.”
Lithium was first discovered in Cornwall around 1864 and has not been mined again since 1914 when it was produced as an ingredient in fireworks. Now, however, Cornish Lithium is reportedly in the testing stage to see if the metal can be produced commercially to meet the growing demand required for the electric car sector.
Despite Cornwall’s close historic ties to mining lithium, Wrathall insists that the project is purely commercial.
Cornish Mining Revival For Lithium Production
“It’s not a mission that drives me to the point of being emotional or romantic,” he says. “It’s vitally important that we do get this technology otherwise Europe has got no lithium supply.”
The European Commission has also stated their goal to end the sale of new petrol and diesel cars by 2035 to aid the environment. That being said, the majority of lithium extraction currently relies on power provided by environmentally damaging fossil fuels─a slight contradiction.
Alex Keynes, from the Brussels-based lobby group Transport & Environment, is adamant that mining for lithium should be done sustainably.
“Our view is that medium-to-long term, the majority of materials including lithium should come from efficient and clean recycling.
“Europe from a strategic point of view should be looking at securing its own supply of lithium.”
Despite growing competition from abroad, British Lithium Chairman, Roderick Smith, continues to place importance on the mining of lithium within the UK.
“Imagine what the UK economy would look like if we lost our automotive industry,” Smith says. “The stakes are high for the UK.”
Smith expects the UK to compete with other European countries to secure a lithium battery plant in the near future.