The lithium market: Africa’s moment to shine

As the demand for clean energy continues to soar, so too does the need for lithium to manufacture lithium-based batteries, which are crucial for energy storage systems. China currently dominates the global supply chain despite holding only 7% of the world’s lithium reserves. With its rich lithium resources, Africa is at a crucial point for development. It needs to enhance infrastructure and address political and economic challenges to become a significant player in the global lithium market.
Over the years, China has secured a monopoly over critical minerals like cobalt, lithium, and rare earth elements—essential for the green energy transition. However, western governments and international companies are beginning to challenge this dominance, and Africa, with its rich lithium resources, could play a crucial role in the competition for lithium supremacy.
Africa is at a crucial turning point in developing its lithium resources, Zimbabwe, Namibia, Ethiopia, Ghana, Mali, and the Democratic Republic of the Congo (DRC) hold significant reserves. These countries aim to expand their processing and refining industries to secure a larger share of profits from the rising global demand for battery materials.
While Africa’s lithium resources offer substantial potential for economic growth and job creation, establishing large-scale lithium hydroxide plants requires a reliable supply of power, chemicals, and raw lithium. Currently, few regions in Africa can provide these essentials. Moreover, governments must create sufficient incentives for companies to add value domestically.
A significant barrier to project development in Africa is the lack of transportation infrastructure. While some countries can process lithium domestically, they need reliable highways to transport products to international markets. Many operations are distant from ports, and landlocked nations face complex cross-border logistics. China is currently the largest investor in Africa’s roads and highways.
Political instability and corruption further complicate the situation. For example, a legal dispute between Australia’s AVZ Minerals and China’s Zijin Mining over a concession at Manono in the DRC underscores these challenges. Similarly, Atlantic Lithium is facing bribery accusations in Ghana, while Zimbabwe’s ban on raw lithium ore exports, aimed at reducing illicit mining, adds uncertainty and raises project costs.
Global market dynamics for lithium are volatile. Prices surged to $80,000 per tonne in December 2022 but have since fallen to around $55,000, prompting some western miners to reassess their investments, even though this price remains well above the historical average of about $15,000. Anticipating potential shortages, many western countries are also exploring alternatives like sodium-ion batteries.
To become a global hub for Lithium, African nations must enhance cross-border infrastructure and logistics. Improved logistics can facilitate lithium exports and support various industries, including agribusiness, creating millions of jobs. However, building this infrastructure requires significant investment, which only countries like China can afford to provide quickly. Chinese financiers are often more willing to take on high-risk projects than western development banks.
If Africa can rapidly bring its lithium to market, it could ease bottlenecks in the energy transition. By 2030, the continent has the potential to supply 20% of the world’s lithium. Miners anticipate steady demand and welcome competition from Chinese firms, as well as interest from developed nations like Canada and Australia. A diverse, competitive market is essential for Africa to fully capitalise on the lithium boom.
Former United States secretary of state, Henry Kissinger, once remarked, “Control oil and you control nations.” Today, a similar argument can be made for lithium. Africa is at a critical crossroads in developing its lithium industry, which could significantly boost its prosperity. China has worked for years to secure a reliable supply chain for essential minerals like lithium, launching initiatives such as the Belt and Road Initiative (BRI). Chinese companies are actively acquiring African mines and building refineries for processing. For now, Africa will rely on Chinese investments to grow its lithium sector, making effective negotiation with Chinese interests essential for maximising its potential and influencing the global energy transition. However, this is Africa’s moment and Africa must seize the opportunity. The continent should resist any external pressure and instead negotiate strategically to secure the best possible deal, regardless of the buyer.
This article is authored by Samir Bhattacharya, doctoral scholar, Jawaharlal Nehru University and senior research associate, Vivekananda International Foundation, New Delhi.