Africa-Press – Namibia. Namibia''s lithium revenues, based on Simonis Storm estimates, could exceed all other commodities combined, and could therefore improve the country''s trade and current account balances as well as gross domestic product growth rates.
This is according to a Lithium Report compiled by the local stock brokerage and released this week. "Given our estimates, the local lithium sector''s revenue to government would be the largest, compared to all other commodity mining operations in Namibia", it stated.
In the report, SS cautions about a long-term view on lithium, given a threat of new entrants to the battery and Electric Vehicle (EV) market. "It can well be that lithium is not the preferred mineral for battery, renewable energy, equipment and electronic consumer goods production in the long run," Simonis Storm observed. The report noted that restarting lithium production in Namibia after 1998 can be a good development for the local mining industry and the country''s economy. SS pointed out that given the capital-intensive nature of general mining, it is not expecting lithium to contribute to major boosts to socio-economic indicators such as employment, but does view the renewed interest in Namibian lithium mining as a positive for export earnings and government revenue.
"Using an average rand to USD exchange rate of 18, these figures are as high as N$13.9 billion in terms of the sector''s value, N$4.6 billion in revenue to government (taxes and royalties combined) in the extreme case and N$1.7 billion in the conservative case", the SS report states. Prices for lithium more than doubled last year, as demand from the electric vehicle industry outstripped supply.
In comparison, mid-year estimate figures for the current financial year show diamond mining companies could pay N$1.6 billion in taxes and N$1.5 billion in royalties. For non-diamond mining companies, taxes paid are estimated at N$576 million, and royalties at N$618 million. The Simonis Storm
report further stated that timing and ore grades are big considerations in mining. An opportune time to invest, whether as a mine or individual investor, is usually once the bubble has burst, which it stated the global lithium price data shows has occurred.
"It is important to note that Namibia''s estimated lithium reserves have grade concentrates far below the global standard of 6%. So, Namibia''s lithium exports will fetch a lower global price per tonne and so the estimates above could be overstated,
China is the world''s top lithium refiner, and a leading producer. However, Western governments and companies are trying to challenge that, and see Africa''s lithium reserves as an opportunity. Africa''s lithium production is set to rapidly increase this decade. From 40 000 tonnes this year, the continent will likely produce 497 000 tonnes in 2030, commodities trader Trafigura estimates, with the bulk of that coming from Zimbabwe.
That country in December imposed a ban on raw lithium exports, a measure aimed at stopping the smuggling of lithium ore, and spurring mines to process in the country.
Namibia will follow that example.
"We are saying to ourselves, if you have got the minerals that everybody wants now, you need to make sure that at least you probably mine those minerals differently, and not in the usual manner," Namibia''s mines minister Tom Alweendo told Reuters in an interview at the ''Investing in African Mining'' Indaba in Cape Town in February.
"We are going to insist that all lithium mined within the country has to be processed in the country." Meanwhile, the local stock brokerage emphasised that lithium
exploration in Namibia has expanded significantly in the last two years. The report reads: "Two lithium mines were operational prior to Independence are now taken over by new investors, who are looking at restarting these operations. If current explorations realise in actual production operations, Namibia will essentially be adding a whole new commodity market to its local mining industry by restarting lithium mining since 1998. Two of the biggest and most progressed lithium operations in Namibia include Lepidico and Andrada''s operations".
The SS report noted that Karibib is fully permitted for the re-development of two open pit mines at Rubicon and Helikon 1, which will feed lithium mica ore to a central mineral concentrator. During 2022, phase one of the project estimated ore reserves at 9.4 million tonnes and a life of mine of 19 years.
Drilling at Helikon 2 and 3 commenced in February 2023, with the objective of extending the life of mine to over 20 years.
Drilling results at Uis from Andrada''s tin mine surpassed expectations in terms of lithium grades, and reinforced their belief that Uis hosts one of the largest lithium resource deposits globally. Andrada''s estimates indicate a higher ore grade than Lepidico.
"In February 2023, the company announced a 30% increase in estimated reserves to 81 million tonnes. An advantage for the Uis mine is that Andrada can progress to commercial production much faster than new greenfield lithium resources being pursued elsewhere in Namibia. The company is in the process of constructing a pilot facility to process large amounts of lithium and secure an off-taker," the SS report added.
"We exclude other lithium operations in our calculations as they are still in the exploration phase, and given that no credible information around Xinfeng can be found. We, therefore, only use publicly-available production estimates from one local mine and apply this figure to other mines, and further assume that no other lithium mine
becomes operational in 2025," the SS report clarified.
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Andrada Mining has partnered leading lithium producer, Sociedad Química y Minera (SQM), to develop the Lithium Ridge project in Namibia. SQM, a Chilean chemical company and supplier of plant nutrients, iodine, lithium, and industrial chemicals, is the world''s biggest lithium producer.
The Andrada deal is SQM''s first venture into Africa, and the partnership is expected to unlock the potential of Lithium Ridge as SQM will fund exploration and a feasibility study. In return, SQM agreed to pay Andrada a N$9.2 million participation fee on signing and a further N$27.6 million upon satisfaction of set conditions. Lithium Ridge is located 35 kilometres from Andrada''s Uis Mine and covers approximately 3 300 hectares. The deposit contains significant lithium, tin, and tantalum mineralisation.
However, the agreement is subject to conditions precedent, including getting approval from the Namibian Competition Commission.
Andrada Mining owns the Uis Mine, formerly the world''s largest open-cast hard rock tin mine, and has three mining licences: ML134 (Uis), ML133 (Lithium Ridge), and ML129 (Spodumene Hill). The main minerals for these licences are tin, lithium, and tantalum.
Chief executive officer at Andrada, Anthony Viljoen, expressed excitement about the partnership, stating that the agreement is of strategic importance for both partners.
"This partnership solidifies our belief in the Lithium Ridge asset as a potential world-class resource and further establishes Andrada as a multi-asset, polymetallic explorer and miner. We believe this partnership also significantly enhances the value of our entire asset portfolio," Viljoen said.
He said the collaboration with SQM will provide the expertise and resources needed to fully unlock the potential of Lithium Ridge, while allowing the continuation of the development of Uis through existing financing relationships.
The statement released by Andrada also indicated that the terms of the deal allow SQM to earn up to a 50% interest in Lithium Ridge through fully funding exploration and the definitive feasibility study (DFS). As part of the agreement, SQM has committed to paying Andrada a total of N$36.8 million in initial payments, with an additional option to invest N$368.4 million over three-and-a-half years.
SQM''s International Lithium Division CEO, Mark Fones, highlighted Namibia''s potential in terms of its abundant mineral resources, adding that they are excited to partner Andrada Mining.
"We are excited to announce the completion of this agreement, which confirms our commitment to finding the best lithium assets in the world that efficiently diversify our portfolio. Namibia is among the top mining jurisdictions in the region, and we are pleased to begin exploration with a proven partner like Andrada Mining," he said.
A report released last year by stock brokerage, Simonis Storm (SS), indicated that Namibia''s lithium revenues could exceed all other commodities combined, and could therefore improve the domestic trade and current account balances as well as gross domestic product growth rates.
"Given our estimates, the local lithium sector''s revenue to government would be the largest, compared to all other commodity mining operations in Namibia", the report stated.
In the report, SS cautioned about a long-term view on lithium, given a threat of new entrants to the battery and Electric Vehicle (EV) market. "It can well be that lithium is not the preferred mineral for battery, renewable energy, equipment and electronic consumer goods production in the long run," Simonis Storm observed.
The report further noted that restarting lithium production in Namibia after 1998 can be a good development for the local mining industry and the country''s economy in general. SS, however, pointed out that given the capital-intensive nature of mining, it was not expected for lithium to contribute to major boosts in socio-economic indicators such as employment, but does view the renewed interest in Namibian lithium mining as a positive for export earnings and government revenue.
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