Mwana Africa to Spend US$26m on Re-opening Zimbabwe Nickel Smelter
Some US$26.5million is to be spent on restarting a Zimbabwean smelter after nickel prices soared following a ban in January of Indonesian exports.
The Bindura Nickel Corporation (BNC), which operates the smelter, hopes to have its operation up and running by the first half of 2015.
Parent company, AIM-listed Mwana Africa announced the decision to reopen following the conclusion of an independent study, which found it to be both a beneficial and viable option.
The study carried out by Hatch Goba also found that as well as financial benefits, restarting the nickel smelter would lower transport costs and enable higher revenues through the sale of higher-value nickel leach alloy.
Half of the capital costs are expected to be funded through debt finance while the rest will be met by BNHC’s cash flow and company cash balances.
Kalaa Mpinga, Mwana Africa’s Chief Executive, said: “I am pleased to announce completion of the independent study of the accelerated smelter restart plan. This paves the way for us to capitalise on the opportunity presented by a favourable nickel market.
“We can grow our revenue stream by moving rapidly up the value chain from current production and sale of concentrate, with the associated transportation saving cost of this, to production and sale of higher value nickel leach alloy.
“This study outlines the costs and key milestones required to restart the smelter, and we look forward to updating the market on financing and development of the accelerated smelter restart plan as it evolves over the coming months.”
While Indonesia is planning new investments in nickel smelters, this is anticipated it will take some time before coming to fruition.
Mwana Africa is a pan-African resources company and also has operations in South Africa. It also has a broad range of exploration projects and interests in the Democratic of Congo, Angola, Ghana and Botswana. Its diverse asset base includes gold, nickel, copper, cobalt and diamonds.
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.