Lithium is set to be in high demand from 2025 with its value expected at N$13.9 billion, which can boost the country’s export earnings and revenue, a research firm has projected.
According to projections from Simonis Storm, it is expected that lithium will contribute N$4.6 billion in revenue to the government in the extreme case and N$1.7 billion in the conservative case.
In a Lithium Industry in Namibia report, the firm notes that the local lithium sector’s revenue to the government would be the largest compared to all other commodity mining operations in Namibia.
“Restarting lithium production in Namibia after 1998 can be a good development for the local mining industry and the country’s economy. Given the capital-intensive nature of general mining, we are not expecting major boosts to socioeconomic indicators such as employment,” the report reads.
“However, we view this as a positive for export earnings and revenues to the government. Indeed, based on our estimates, lithium revenues could exceed all other commodities combined and could therefore improve the trade and current account balances, and GDP growth rates as well.”
This comes as Simonis Storm excluded other lithium operations in their calculations as they are still in the exploration phase and given that no credible information around Xinfeng can be found.
“We use publicly available production estimates from one local mine to determine the market size of a lithium mine, assuming no other mine will become operational in 2025. For pricing, we take an average of forecasted global lithium prices for 2025 (US$55,000 per tonne) and use the current price of about US$26,000 per tonne and a median price of about US$40,000 per tonne in our market size calculation,” SS said.
“As a result, lithium miners are estimated to pay 37.5% corporate tax and 2% royalties on annual profits to the government per annum. The average operating cost of producing lithium is US$1,500 to 2,000 per tonne for 3% content ore, while for grades closer to 1%, the cost doubles. Development costs average US$2,000 per annual tonne, meaning hard rock production is likely to average US$3,500 to 5,500 per tonne,” reports SS.
The report notes that these costs are forecasted at US$4,165 per tonne by 2025 according to Statista.
SS estimates the total value of the local lithium industry as high as “US$770 million (6.7% of GDP) to US$364 million (3.2% of GDP), with total taxes paid to the government at US$240.1 million and royalties of US$34.3 million in the extreme case.”
Exploration in lithium in Namibia has increased significantly in the last two years, with two major operations, Lepidico and Andrada, looking to restart production.
Drilling results at Uis from Andrada’s tin mine exceeded expectations, indicating one of the largest lithium resource deposits globally.
Meanwhile, Lepidico is evaluating two throughput scenarios for a Phase 2 development at Karibib – a sister plant with 5,000 tonnes per annum lithium hydroxide output or a larger facility with 20,000 tonnes per annum output.
