Chinese miners and refiners are significantly increasing lithium output in Africa, responding to the growing demand for this critical battery metal despite concerns about potential oversupply.

According to S&P Global Commodity Insights, Africa is projected to account for nearly 11 percent of global lithium supply in 2024, up from close to zero at the start of the decade. This figure is expected to rise to over 14% by 2028.

The surge in African lithium production follows a spike in lithium prices during 2021 and 2022, which prompted substantial investment from Chinese companies. However, prices have since declined by more than 80% due to increased supply and slower-than-expected sales of electric vehicles.

China, which dominates the global lithium chemicals market, continues to expand its refining capacity and increase its reliance on overseas lithium sources. Claudia Cook, an analyst at Benchmark Mineral Intelligence, noted that as resistance to Chinese involvement in lithium projects grows in the West, Africa is well-positioned to fill the resulting supply gaps.

More than two-thirds of Africa’s lithium output originates from Zimbabwe, where Chinese firms such as Zhejiang Huayou Cobalt Co., Sinomine Resources Group Co., and Chengxin Group Co. have invested billions to establish mines and processing facilities. Additionally, Chinese-backed projects are being developed in Mali, Namibia, and Nigeria.

Lukasz Bednarski, principal research analyst for lithium and battery metals at S&P, indicated that 15 African mines are either under development or being expanded, with production expected to commence by 2030. He emphasized that most of these projects are sustainable even at current market prices.

As new production capacity comes online, the market is anticipated to shift from a surplus to a deficit following a peak in global lithium surplus in 2027, according to Benchmark.

While Zimbabwe’s industrial mines provide clearer production data, tracking lithium supply from countries like Nigeria remains challenging. Nigeria has been the second-largest source of African lithium over the past year and a half, according to Thomas Matthews, battery metals analyst at CRU Group. He noted that more than half of Africa’s lithium production last year came from informal, small-scale operations, but this is changing as industrial output grows.

In May, Nigeria opened its first lithium processing facility and is pursuing additional China-backed projects to regulate trade and enhance revenue.

Low-grade lithium material from Africa constituted over a quarter of China’s lithium imports by metal content during the first half of this year, Matthews reported.

Western companies are also exploring opportunities in African lithium. Atlantic Lithium Ltd., based in Sydney, is constructing Ghana’s first lithium mine, which will supply concentrate to the U.S. market, potentially benefiting from tax credits introduced by President Joe Biden. Other companies, such as Andrada Mining Ltd. and Tantalex Lithium Resources Corp., are developing projects in Namibia and the Democratic Republic of Congo, respectively.

Investors such as Algy Cluff and Hugh Morgan are also targeting significant lithium production in Zimbabwe and Nigeria.

While Australia, Chile, and China are expected to account for about 70% of the total lithium supply in 2024, African mines are projected to help reduce this share to just over 50% by the end of the decade, according to Cook. The continent’s increasing role reflects a broader trend in diversifying lithium production sources.

Stay updated on the latest battery news.