CIL explores Lithium mining opportunities in Africa; Plans US$ 1 billion investment

In a bid to diversify into Lithium mining, Coal India Ltd (CIL), the largest public-sector coal miner in India, is looking for investment opportunities in the Lithium assets in African countries, particularly Zimbabwe and Namibia.

Sources said the company has plans to invest US$ 1 billion to get into lithium mining in Africa through a merger & acquisition route. Apart from Lithium, CIL is also weighing options to make significant investments in cobalt and nickel projects abroad. 

“ A high-level committee is said to have been constituted, taking professionals from technical and finance disciplines to study various projects in Africa, particularly in the two major lithium-producing countries to acquire participatory interests.

“ Lithium has a huge potential to grow because of the soaring popularity of electric vehicles (EVs) and energy storage batteries worldwide. The most important component for car battery, Lithium business is expected to witness an exponential growth in the next five years,” said a source requesting anonymity. 

Echoing him, another senior official of CIL who is privy to the company’s foreign investment plans, said the company is trying to grab the opportunities now so as to enable the country to have adequate Lithium equity by 2030.

The Indian EV market is poised for 49 per cent compound annual growth rate (CAGR) between 2022 and 2030 as per the forecast of the Economic Survey-2023 with 10 million annual sales. Accordingly, the demand for Lithium is set to witness an exponential growth, the official pointed out. 

“ We have an enviable technical expertise as well as a super strong balance sheet to scout for the Lithium projects abroad. A slew of steps is being taken in this direction so as to diversify into this field of future energy,” he said. 

Africa has considerable Lithium resources, boasting 5% of the world’s total reserves. The  Lithium-rich African countries, including Zimbabwe and Namibia, are trying to develop processing and refining industries to capture more of the profits of global demand for battery material.

As of now, China controls the Lithium sector in Africa with large-scale investments. The country also dominates the major supply chain as well as socio-political influences in the continent. However, the Western nations and international companies are vying for an entry into this countries with sizeable investments. 

For their part, African countries are determined to retain more of the value of their resources than they have in the past, which means not just mining them but processing them before export, which economically is referred to as beneficiation.

“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,” Namibia’s mines minister Tom Alweendo told Reuters in an interview at the Investing in African Mining Indaba in Cape Town.

While the competition is extremely fierce, CIL is planning to enter into a Memoranda of Agreement with prominent players from Europe and America. The company may also form a wholly owned subsidiary at a later stage for the foreign assets in the Lithium sector, sources said.