The Zambian Advantage: STEVEN DIN
A transition to electric vehicles is driving global demand for lithium, cobalt and nickel.
LAST month Britain announced that the sale of diesel and gasoline cars would be outlawed by the year 2040. France has also set a target of 2040, while Norway intends to ban combustion engines in cars by 2025, and India by 2030. These initiatives are designed to reduce air pollution and meet the conditions set out in the Paris agreement to reduce global emissions.
The number of electric cars in the world is expected to increase to 140 million by 2030, according to the International Energy Agency. This is good news for us in Zambia, because we have plenty of cobalt, which is a key ingredient in the manufacture of batteries for electric cars.
Right now, almost half of the world’s supply of cobalt is used to produce lithium-ion batteries. Demand for these batteries is expected to double or triple in the next years. At current rates of production, global supply won’t match demand, which will of course impact prices. Already the price of cobalt traded on the London Metal Exchange (LME) has exploded from US$22,000 per tonnes to US$56,000 since the start of January 2016.
Cobalt’s supply chain is very fragile and is massively dependent on stability in the Democratic Republic of Congo (DRC), which accounts for almost half of the world’s production – 66,000 tonnes of 123,000 tonnes mined globally, according to the US Geological Survey (USGS).
Small amounts of cobalt are produced from cobalite, but the main source of the element is as a by-product of copper and nickel mining, leaving global production dependent on the economics of mining these two metals.
Zambia is a leading cobalt producer, which we mainly produce as a by-product of copper. However, our potential is much greater. Zambia’s production capacity has actually come down in the last few years, from a high of 12,000 tonnes in 2003, 7,800 tonnes in 2008, to 5,000 tonnes in 2016. Cobalt production has not kept pace with rates of copper production in Zambia.
Zambian mining firms, like KCM, are now exploring the potential to invest more in cobalt production with a view to moving Zambia higher in the cobalt mining value chain. At KCM’s Nchanga smelter we are able to recover cobalt contained in copper concentrates. We produce this in an alloy form known as copper-cobalt alloy which is marketed to cobalt processing plants around the world. So, we are already in this segment of the market, but only on a small scale. I am consulting now with metallurgical experts to see how we can ramp up our cobalt production. I know KCM isn’t the only mining firm in Zambia exploring this potential for growth.
The greatest challenge we face to growing our cobalt production is the massive capital investment required to set up cobalt processing plants. The next greatest challenge is sourcing enough clean power to produce cobalt in a manner that is environmentally sustainable and makes a net positive contribution to the global green economy.
Despite these challenges, I view cobalt as an enticing growth axis for Zambia’s mining industry. At KCM, we have resources of around 350,000 tonnes. Running at full capacity we can join the DRC as one of the world’s leading cobalt suppliers to a growing global market, fuelling a green, transport economy.
The author is Chief Executive Officer of Konkola Copper Mines plc (KCM). Prior to taking up his post at KCM, Mr Din directed mining operations for major global investors in Zimbabwe, Guinea and South Africa.