The global drive towards energy transition and uptake of technologies that reduce carbon emissions have created a mad rush for critical minerals such as lithium, nickel, cobalt, bauxite, copper etc. Resource-rich countries who position themselves strategically by developing their domestic industrial capacity to add value to these critical minerals stand a bigger chance of reaping significant gains in the upper end of the value-chain.
Africa is deemed to hosts about 30% of the global mineral reserves and has huge deposits of these critical minerals and other precious metals. Nevertheless, the main challenge for the continent has been the overconcentration on the extraction and exportation of raw minerals without any value addition.
In recent times however, there is a growing trend of some resource-rich countries in Southeast Asia and Africa taking bold steps to halt this mineral export trajectory and transitioning to add value to their raw minerals in order to move to the upper end of the commodity value chain. Countries such as Zimbabwe, Namibia and Indonesia are in recent times the notable countries that have introduced legislations to ban the export of raw minerals in order to derive maximum value from processing these minerals domestically.
Zimbabwe’s ban on lithium ore exports
Zimbabwe holds the sixth largest lithium reserves globally and is the largest producer of the commodity in Africa. Its Bikita mine, 300km south of the capital Harare, boasts 10.8m tonnes of lithium ore, and the Arcadia Lithium Mine is expected to reach an annual production of 2.5m tonnes, equivalent to $3 billion in exports.
With the growing demand for electrical vehicles, the value of lithium is expected to surge. In order to position itself to reap significant gains from this economic boom, Zimbabwe in December 2022 through its Statutory Instrument 213 of 2022, otherwise known as the Base Minerals Export Control (Lithium Bearing Ores and Unbeneficiated Lithium) Order 2022, imposed a ban on the export of raw lithium allowing only concentrates to be shipped out. According to the regulations, “no lithium bearing ores, or unbeneficiated lithium whatsoever, shall be exported from Zimbabwe to another country except with a written permit from the Minister of Mines and Minerals”.
Apart from curbing the incessant smuggling of lithium ore, the ban was introduced to enhance value addition, beneficiation and spur significant opportunities for investment in processing and manufacturing firms.
Already, Chengxin Lithium Group Co. and Sinomine Resource Group Co. are exploring a joint venture to set up a battery metals processing plant in Zimbabwe, while Zhejiang Huayou Cobalt Ltd. has invested $300 million to develop a processing plant at its Arcadia lithium mine.
Namibia’s ban on export of unprocessed lithium and other minerals
The government of Namibia on Thursday, June 8, 2023, announced the ban on the export of unprocessed critical minerals such as crushed lithium ore, cobalt, manganese, graphite and rare-earth metals. This was announced by Emma Theofelus, Deputy Minister of Information and Communications Technology, indicating: “Cabinet approved the prohibition of the export of certain critical minerals such as unprocessed crushed lithium ore, cobalt, manganese, graphite and rare earth minerals…Smaller quantities of the above-mentioned minerals may be allowed for export at the discretion of the minister of mines and energy, subject to Cabinet endorsement.”
Namibia holds significant deposits of lithium, which is needed for the transition to renewal energy. The country also has rare earth minerals such as dysprosium and terbium needed to produce permanent magnets in electric car batteries and wind turbines.
It is clear that Namibia is positioning itself to develop its domestic processing and refining industries in order to reap more profits in the lithium value-chain. Speaking to Reuters earlier this year at the Investing in African Mining Indaba in Cape Town, Namibia’s Minister of Mines Tom Alweendo hinting on the impending ban noted: “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…We are going to insist that all lithium mined within the country has to be processed in the country.”
Indonesia’s ban on export of raw nickel, bauxite and other critical minerals
Indonesia in recent times has banned the export of raw minerals such as nickel, coal and bauxite, and would later extend the ban to minerals such as copper, iron, lead, zinc, and anode mud from copper concentrates. In early 2020, the country banned the export of nickel ore to attract foreign investment to develop its domestic processing facilities in order to add value to the commodity. The country indeed successfully realized this economic goal after the ban, by attracting huge investments from China in the construction of smelting facilities in the country. The Cabinet Secretariat reports that the ban in the export of the nickel ore raised the value of the country’s nickel exports from IDR 17 trillion (approx. USD $1.1 billion) at the end of 2014 to IDR 326 trillion (approx. USD $21 billion) in 2021.
In 2022, the country temporarily banned the export of coal and palm oil for various economic reasons. Following the success of the nickel ore export ban, the government early this year announced another ban on the export of raw bauxite to be enforced after June 10, 2023. The introduction of the ban on bauxite ore export just like the case of nickel ore stems from the country’s determination to develop a domestic mineral refining and processing industry in line with their amended Law No. 3 of 2020 on Mineral and Coal Mining. This is meant to create employment, increase foreign exchange, and enhance sustainable economic growth.
According to the Indonesian Minister of Energy and Mineral Resources, Arifin Tasrif in an interview with Reuters, “Indonesia’s three smelter-grade alumina plants and one chemical grade alumina plant, with combined input capacity of nearly 14 million tonnes are enough to absorb the country’s total ore production.”
However, bauxite miners in Indonesia are imploring the government to reconsider its decision. The main concern of the miners is that current domestic facilities are not adequate to process all their output. Speaking to Reuters, the head of Indonesian Bauxite and Iron Ore Companies Association, Ronald Sulistyanto, indicated that production has reached an estimated 30 million tonnes per year, which could force miners to cease operation if there is no market for their excess ore. According to Sulistyanto, a bauxite processing facility can cost up to three times as much as a nickel pig iron smelter starting at estimated cost of $1.2 billion, and miners have struggled to secure financial support from banks since 2009 to build alumina smelters when the country first declared its intention to restrict exports in 2009.
Government official Irwandy Arif, Special Staff of the Minister of Energy and Mineral Resources believes that although miners have been given enough time to comply with the ban, exemptions could be given to some miners if their smelters are at least half-way completed.