Could the Ebola Crisis Cause Sierra Leone to Diversify from Mining?
The recent crisis in Sierra Leone involving the deadly Ebola virus could force the country to diversify from a mining-heavy economic base.
Chairman of the Chamber of Mines, John Bonoh Sisay, believes the signal for change is now, and it could be beneficial. According to the chairman, mining companies will have to change the way they interact with local people as well as place a greater emphasis on corporate social responsibility.
“In the long term, it’s not a bad thing to mature the economy in that way. There are other opportunities especially in agriculture, which, from a stability point of view, really does create a lot of jobs very quickly [and the] skills base is minimal,” said Sisay, who is also chief executive officer of Sierra Rutile, a mineral sands producer with a rutile mine in the south-west.
The decline in iron ore has caused a shakeup in Sierra leone’s mining industry, which has also been devastated by costs association with the outbreak of Ebola.
“With the Ebola situation, we’ve … understood even more the importance of staying really connected with the wider community, and whilst it’s not our primary responsibility, we will focus more, from a CSR [corporate social responsibility] point of view, on public health issues, because obviously they have a direct impact on what we do and our operations,” Sisay said.
Over 9,700 people have been killed by the disease in the three worst-affected countries – Sierra Leone, Guinea and Liberia. Sources have suggested the three nations could lose out on more than $1.6 billion in lost output in 2015 alone, more than 12 percent of their combined gross domestic product.
In 2013, mining helped increase growth in Sierra Leone to 20 percent and ignited investor interest in the country. However, the industry has faced a wide range of criticism, including securing unduly favorable tax concessions from African governments desperate to harness resource wealth. In addition, local populations have become disillusioned with the benefits of mining projects.
Sisay believes the industry could do more to improve the transparency of contract negotiations.
“One of the realities we need to accept is that mining investment in some developing countries is a high-risk investment, and the market unfortunately will not lend you money below a certain NPV [net present value],” Sisay said. NPV is a technique used to estimate the value or net benefit over the lifetime of a project.
“Governments need that capital to come into country and so concessions are sometimes necessary. I do think there is a case to be made for transparency … so people can understand why and what’s in [the deals].”
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.