NRGI: Ghana’s domestic lithium refining plan should be based on economic feasibility

A recent report by the Natural Resource Governance Institute (NRGI) has raised concerns about Ghana's plans to refine lithium domestically. The report suggests that the economic feasibility of such a refinery would be questionable due to limited access to feedstock and high costs compared to global competitors. Thomas Scurfield, Africa Senior Economic Analyst at NRGI, discussed the key findings of the report in an interview with CNBC Africa. According to Scurfield, the report estimates a potential government revenue loss of at least $500 million if Ghana were to proceed with refining lithium locally instead of exporting unrefined concentrate. Scurfield emphasized NRGI's mission to ensure that people in low and middle income countries benefit from their mineral resources. While supporting African countries' ambitions to move up the value chain, NRGI also highlights the importance of strategic decision-making. Value addition may not always be favorable and could entail significant costs for some countries. Therefore, NRGI aims to empower African governments with independent information and analysis to make informed decisions on resource utilization. The report points out Ghana's limited access to feedstock and tough competition from global players, particularly China, which enjoys low operating costs and capital. In light of these challenges, a domestic lithium refinery in Ghana would struggle to be profitable without access to competitively priced feedstock. As a result, the government would generate less revenue compared to exporting unrefined concentrate. To navigate the evolving lithium market, the report recommends a 'mine and monitor' approach for Ghana. While focusing on kickstarting lithium mining operations, the government should actively monitor global developments in lithium refining. Conditions in the market could change in the future, potentially making domestic refining a viable option for Ghana. Scurfield highlighted the dynamic nature of the global lithium market, with electric vehicle manufacturers eyeing opportunities in Africa. The geopolitical landscape and trade tensions have significant implications for mineral value chains, with China currently dominating the lithium market. However, countries like the US and the EU are working to establish their own value chains, which could create opportunities for non-Chinese suppliers. Considering Ghana's national EV policy and growing auto manufacturing sector, there is potential for the country to benefit from the evolution of the lithium market. While it may take time for a significant market to develop in Africa, Ghana could position itself to take advantage of emerging opportunities in the EV sector. In conclusion, the NRGI report serves as a cautionary note for Ghana, urging careful consideration of the economic viability of domestic lithium refining. By adopting a 'mine and monitor' strategy, Ghana can strategically navigate the evolving lithium market and seize opportunities in the growing EV sector.