The Natural Resource Governance Institute (NRGI) warns: local refining of lithium will cost $500 million.
Ghana's Ewoyaa lithium mine is expected to produce 3.6 million tons of spodumene concentrate over the next 12 years. Half of this output has been sold to US-based Piedmont Lithium. The Ghanaian government plans to refine the remaining half locally with the support of the mine owner, Atlantic Lithium.
However, a study by NRGI in March 2025 warned that if Ghana rushes into local lithium processing, it could lose up to $500 million. The financial risk stems from the project's business model.
The first lithium mining project in Ghana, Ewoyaa, is expected to produce 3.6 million tons of spodumene concentrate over 12 years. Half of this will be reserved for Piedmont Lithium under a long-term agreement. Exporting the other half of the unprocessed concentrate would bring Ghana approximately $2.7 billion in royalties, taxes, and dividends. However, if refined locally with Atlantic Lithium, Ghana's revenue would decrease to $2.2 billion.
The reason for the loss is that Ghana's refinery cannot purchase concentrate at market prices without incurring losses. To survive, the refinery must buy ore at a price lower than that of Chinese refineries, which dominate the market. This vulnerability reflects the structure of the global lithium refining market.
China dominates the global lithium refining market, controlling most of the capacity to convert spodumene into lithium chemicals. This advantage stems from its technical expertise, massive economies of scale, and low operating costs. Outside of China, lithium refineries struggle to compete. In recent years, two of the three lithium spodumene refineries in Ghana have canceled expansion plans due to competition from China.
Moreover, Ghana's refineries face greater challenges than their Asian competitors. They need to address higher startup costs, import demands for key chemical reagents, and uncertainties regarding the sale and use of by-products. More importantly, the Ewoyaa mine alone cannot provide enough spodumene to sustain a fully operational refinery, making the project's economic viability precarious from the outset.
The NRGI recommends that Ghana delay the construction of the refinery. Instead, it suggests starting mining operations and closely monitoring the global lithium market. Key signals to watch include whether China's demand for lithium carbonate grows and whether battery and cathode manufacturing expands outside Asia.
The NRGI emphasizes that refining only makes sense when there is sufficient lithium spodumene supply to keep the plant running. The reserves of Ewoyaa alone are insufficient. The Ghanaian government should promote new lithium discoveries and negotiate with producers in neighboring Mali and Nigeria to coordinate ore supply. Regional resource integration can reduce investor risks and increase the profitability of shared refineries.
This cautious approach is not limited to Ghana or lithium mines. It raises a broader question: how feasible are local processing projects in African countries rich in strategic minerals. If production is insufficient, industrial demand is high, or technology is immature, many local refining projects may be unprofitable.
Scattered mineral production and isolated projects across Africa hinder the continent's competitiveness globally, especially against dominant Asian enterprises. Whether it’s lithium, copper, or rare earth elements, insufficient scale hinders African producers from achieving the economies of scale needed to reduce costs and enhance competitiveness.
An increasing number of analysts are calling for a shift in strategy: African countries should not act alone but instead engage in regional cooperation. The Democratic Republic of Congo and Zambia have explored such partnerships for years. Integrating mineral resources, sharing infrastructure, and coordinating industrial policies can ensure supply chain security and strengthen Africa's bargaining power with major international buyers.
Source: ecofinagencyy
Original article: https://www.toutiao.com/article/1830217746490368/
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