Africa on the Verge of Battery Metals Investment Boom

Amid high demand for electric vehicles (EV) and supply concerns following sanctions on top producer Russia, Africa has become a spotlight once again for companies that want to secure supply of metals needed for energy transition.

Companies, investors and government have all started to reconsider projects in Africa they have previously overlooked to ensure the supply of metals to feed an accelerating net-zero push.

This year’s Investing in African Mining Indaba conference, which will take place from May 9 to 12 in Cape Town, will see high ranking officials from governments including the United States and Japan.

While the rich nations have previously been hesitant to invest in politically challenging sub-Saharan Africa, the need for new supplies has started prompting them to take on those challenges. The U.S. in particular wants to position itself as a strong supporter of battery metals projects in sub-Saharan Africa.

Moreover, while Africa has its challenges, those challenges may not be more difficult than those in Canada. It could even be easier to bring a project to fruition in Africa than in Canada or the United States.

As an example, Rio Tinto’s Resolution copper project in the United States was halted over Native American claims on the land, and conservation issues.

Still, certain risks of mining in sub-Saharan Africa remain high.  The security risk facing mines in the gold-rich Sahel region was highlighted last month when Russia’s Nordgold had to abandon its Taparko gold mine in Burkina Faso over an increasing threat from militants.

Even South Africa, the continent’s most industrialized economy, has been challenging for coal miners recently as the country’s rail infrastructure has been deteriorating, forcing producers to resort to trucking their product to ports.

Despite those risks, Africa’s rich metal deposits have become more attractive as Russia’s 7% of global nickel supply, 10% of the world’s platinum, and 25-30% of the world’s palladium off the table.

Under these circumstances, mining companies will have to start looking at riskier countries to maintain growth.

Tanzania’s Kabanga Nickel project secured funding from mining giant BHP in January, and the company stated that it is seeing increased demand from potential offtakers.

As securing the supply of battery metals from friendly jurisdictions get harder, some difficult decisions will have to be made, and it is going to force buyers to make some new decisions about where they want to source.

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