China is winning Africa’s “white-gold” rush for lithium

Today the “white gold” is held every day by scores of trucks flowing through Goromonzi, carrying lithium en route to China, where most of the metal is refined for use in electric vehicle batteries and electronics . largest lithium mine, opened this year by Zhejiang Huayou Cobalt, a Chinese firm, “China is buying any lithium it can find,” says a local industry insider. “There is a complete feeding frenzy.”

China’s dash for lithium is part of a larger challenge to the West. America and its allies are trying to weaken China’s grip on clean energy supply chains. They see Africa, home to perhaps 30% of the world’s vital mineral reserves, as part of the solution, and argue that they can do more to help African countries add value to minerals before export.

However China is leading the way. In 2022 the value of its mineral and energy imports was twice that of America and the EU combined (see chart 1), according to the Carnegie Endowment for International Peace, a think tank in Washington. Its role in Africa’s lithium boom shows why. In 2025 Africa’s share of global lithium production will be 10.6%, according to Rystad Energy, a Norwegian firm, up from just 0.1% in 2019 (see chart 2), with Zimbabwe responsible for most of the increase. Overall, more than 90% of Africa’s supply this decade will come from entities owned at least in part by Chinese firms, according to Information Minerals Benchmark, a consultancy.

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China’s urgency is fueled by its desire to dominate supply chains. China has 8% of global lithium reserves but refines 60-70% of the metal. The midstream businesses that do the chemical process, some of which are part of mining groups like Huayou, need to be nurtured. On average, mining projects take 17 years from discovery to production, according to the Institute for Natural Resources Governance, a New York think tank. But many Chinese firms are acquiring existing assets such as Arcadia. Huayou bought Arcadia from Prospect Resources, an Australian-listed firm, for $422m in 2022 – and is developing it at breakneck speed.

African countries are attractive, says Cameron Perks of Benchmark, because “there aren’t many places left for the Chinese to go”. Africa is a “virgin country for lithium minerals”, says Rystad’s Susan Zou, noting that Chinese miners have been operating in African countries for decades. Although prices are under pressure this year, they are still high enough for healthy margins.

Western firms are exploring for lithium in countries such as Ethiopia, Ghana, Namibia and Rwanda. Most of the projects are not yet producing ore. The company may still be owned by some Chinese firms. Before deciding to sell Arcadia, Prospect Resources had been talking to Western diplomats about getting funding from development agencies, but they were frustrated by its slow pace. Huayou did the deal in months.

There are reasons for Western reluctance. A number of refineries are being built outside of China. But investors worry that new mines and processing plants could lead to oversupply and lower prices. They also worry about the political risks associated with African projects, especially in countries with a history of graft and human rights abuses, such as Zimbabwe and Congo.

Moreover, American domestic policies are not encouraging investment in African mines. For example, some tax incentives in the Inflation Reduction Act (IRA), Joe Biden’s bumper package of clean energy subsidies, are only applicable if an increasing share of the basic minerals comes from America or countries with which it has a free trade agreement. . But America has no such agreements with sub-Saharan African countries.

“If not corrected soon,” argue Witney Schneidman and Vera Songwe of the Brookings Institution, an American think tank, “the IRA will have the unintended consequence of ceding… the African market in critical minerals to other nations – such as China .” “

Nor is China blind to Africa’s desire to add value. Huayou has a processing center at Arcadia. According to Ms Zou, more Chinese firms could process and refine metals in Africa in the next few years. She points out that Chinese miners already do most of the first stage of cobalt processing in the Congo. Chinese battery firms are also building facilities in Morocco.

However, it is difficult to see how China’s dominance of critical-mineral mining is appropriate for Africa. China’s immediate priority is to get as much raw material out of Africa as quickly as possible. The case of Zimbabwe and lithium is also a reminder that Chinese mining comes in many forms. In addition to formal miners, there are many middlemen who buy rocks from artisanal miners at knockdown prices. In a report published in March, the Zimbabwe Environmental Law Association (ZELA), a local non-governmental organization, concluded that “the Chinese play a major role in the illicit lithium trade.” He added: “Domination by one country can lead to undesirable outcomes. such as the undervaluation of mineral resources, tax evasion and human rights abuses in the sector.”

At Goromonzi, Tadiwanashe Gwena, a community leader, says the residents are “excited” by the mine. “People know that the true value of lithium is not being plowed back into the community.” The West says it wants Africans to benefit more from the value of their mineral endowment. But while he’s talking, China is digging.

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