The expected boom in the metals market is changing the face of the mining and metals industry across the globe, but it is not automatic that producers of these metals, especially on the African continent would reap the expected benefits and turn their fortunes around. Thus, governments must develop national strategies that will create a pathway for reaping the needed benefits.
Meanwhile, anticipating a favourable metals market for the coming decades presents a lot of scenarios for countries: ‘the differences in benefits’, given whether or not countries have a robust metals industry— especially within the whole mining and metals’ value chain.
Whichever way you look at it, the growing demand for ‘energy transition metals’ indicate a favourable outlook, and Ghana stands the chance of benefitting. Albeit, glaringly, mistakes have been made in the past: unbridled concentration on the extraction of raw metals and exporting same, while only limitedly adding value.
The above approach has been tried for a long time, and it has simply not worked. But this era could be the turning point, as the biggest winners are not merely producers of ores alone but those involved in both production and processing of these ores.
Currently, clean energy technologies are fueling a turbo charge in demand for four industrial metals, namely: copper, nickel, cobalt and lithium, as countries across the globe scale up efforts to reach the 2050 target for global emissions reduction of 1.5 degree Celsius.
Clean Energy Technologies To Increase Demand for Metals than Fossil fuels
Obviously, clean energy technologies require more metals than their fossil fuel-based counterparts. According to a recent analysis by Eurasia Review, prices for copper, nickel, cobalt, and lithium could reach historical peaks for an unprecedented, sustained period in a net zero emissions scenario.
With this outlook, total value of production will rise more than four-fold for the period 2021-2040, and even rivaling the total value of crude oil production, Eurasia Review posited.
BloombergNEF estimated that the global transition will require $173 trillion in energy supply and infrastructure investment over the next three decades with renewable energy expected to provide 85% of the energy needs by 2050.
According to analysts, the value of these metals is projected to rival that of fossil fuels in the next decades to come. That said, it is in the right light to suggest that just as the government has the intention to take control of its upstream oil and gas sector, and equip the National Oil Company to be an operator, so is it necessary for a peculiar strategy to be developed for the mining and metals sector.
“While prices may moderate through 2022 as pandemic supply issues ease, building demand— due to factors including the growth of the electric vehicle sector and the energy transition — should set the stage for historically above-average prices through to 2025.”
S&P’s Mining& Metals team
“We are bullish on mining for 2022 based on fundamental factors and valuations,” Jefferies Group LLC, an investment and finance firm based in the US said in a note entitled: ‘Same old song and dance for 2022’. “We are most constructive on the base metals, and especially copper and aluminum, while we are most cautious on iron ore and coal.”
Repeating Mistakes will be Tragic
Among these metals, Ghana finds its bauxite making a potential run for growth as well as copper, as highlighted by Jeffries. However, S&P’s analysts project that “changes in the Chinese economy could lead to a shift from steel, iron ore and coal to copper, nickel, aluminum, and other ‘energy transition’ metals.”
The Ghana Chamber of Mines, in its 2020 report noted that bauxite production in 2020 mounted a strong run reaching 1.162 million metric tonnes from 1.116 million metric tonnes in 2019, albeit lower than in 2017 when bauxite production enjoyed the highest output growth (1.477 million metric tonnes). However, most of what is extracted is being exported, due to gaps in terms of bauxite refining.
With regards to refining its bauxite minerals, progress has been made in recent times but only minimally. Recently, the Ghana Integrated Aluminium Development Corporation (GIADEC) selected Rocksure International to develop a bauxite mine and refinery in Ghana, estimated at the cost of $1.2 billion.
After completion within two years, the mine and refinery would support adding value to around 900 million tonnes of Ghana’s bauxite minerals across Awaso, Nyinahin, and Kibi regions. This provides tailwind for the production in the country’s alumina industry. It is expected that Aluminium output will continue on a steep growth trajectory as the shine on steel and iron ore slow down comparatively due to price volatility, as S&P Global said.
S&P Global forecast an increase in iron ore price volatility into 2022 due to the combination of underlying market tightness, potential supply disruptions and project delays, global supply chain issues and power constraints.
This does not mean that iron ore and steel are meeting their end, as the use of metals, generally, still remains elevated. Thus, Ghana’s discovery of iron ore is a boost for the country’s metals and mining industry.
As iron ore output increases following the extraction of this metal found in the Oti region of Ghana by suitable investors in the coming years, steel production will also remain elevated as there is the expected completion of a steel manufacturing plant in the coming years by the Rider and Steel Ghana Limited.
Also, Atlantic Lithium’s Ewoyaa Lithium project elevates the country’s expected benefits as the company’s scoping update revealed a production capacity of an average of 300,000 tonnes per annum (tpa), with the current LOM of 11 years, expected to improve further.
According to S&P Global, countries are eyeing an increase in their budgets for exploration of the ‘energy transition metals’. The global research firm projected that exploration of energy metals will rise due to the increase in demand and strong prices that will in turn help drive budgets up to 15 per cent higher in 2022.
Therefore, the government must increase financing towards the operations of the Ghana Geological Survey Authority (GSA) to up its exploration activities around these energy transition metals so the country can benefit the more.
Fundamentally, repeating mistakes and missing out on opportunities will be tragic and Ghana cannot afford to make them over and over again.
The future is bright for the metals sector and Ghana must reposition itself and not be one-sided in its approach by focusing on boosting oil production but even far more in its approach towards boosting production and adding value to its raw metals.
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