Namibia’s Mineral Export Ban
On June 8 2023, the Namibian government announced an export ban on unprocessed lithium and other rare earth minerals (REMs). Namibia is the second African nation to impose an export ban on critical minerals, after Zimbabwe, highlighting the rise of resource nationalism, which aims to capitalise on rising global demand for sought-after commodities in the transition to net zero.
Namibia’s Domestic Interests
Rising demand for electric vehicles and consumer devices drove lithium prices to $75,000 per metric ton in March 2022, a 400 per cent increase compared to its previous five-year average of $15,000. The increasing profitability of rare earth minerals has prompted nations with known reserves to expand their processing capacity. China currently processes most of the world’s REMs, with 58 per cent of the world’s lithium processing taking place within its borders. Namibia’s ban on REM exports aims to improve domestic refining capacity. The International Energy Agency predicts that the country’s mineral export volume will triple in size by 2030. If it is all processed at home, Namibia will see a significant rise in the output’s added value.
Namibia’s President, Hage Geingob, views domestic mineral development as key to industrialisation. The Mines and Energy Minister, Tom Alweendo, asserted that there is “no way” Namibia could industrialise without processing its minerals. Mining and quarrying make up 9.3 per cent of Namibia’s GDP and 66 per cent of its total exports, driven mainly by uranium mining and rough diamonds. Lithium processing would allow for diversification in Namibia’s mining sector, reducing reliance on the fluctuating value of unprocessed mineral exports and forging a path toward sustainable growth. Banning the export of lithium is expected to increase the mineral supply in Namibia, enabling processing plants to purchase unrefined lithium at a discount. Minimising development costs is vital to incentivising domestic and foreign investment. Namibian wealth management firm Simonis Storm Securities projects that Namibia’s lithium refining industry could be worth nearly $1 billion annually by 2025.
Namibia’s Chamber of Mines, an association of mining and quarrying organisations, announced their support for the government’s ban on lithium exports. Chamber executive Veston Malango described it as “necessary” to “grow the economy in line with the African Mining Vision.” This refers to the African Mining Vision (AMV), an African Union strategy meant to enhance Africa’s utilisation of natural resources and “underpin broad-based sustainable growth and socioeconomic development.” The Union’s decision to include lithium processing within the AMV strategy underlines the government’s expectations for future lithium demand in the medium to long term.
International Significance
Namibia signed a trade agreement with the European Union in October 2022, in which it highlighted plans to become a reliable mineral processor. German Chancellor Olaf Scholz has shown explicit support for Namibia’s ambitions, stating that processing will “not only create greater local prosperity…we will ensure that we have more than just one supplier in the future.” Further, two months after Namibia’s announcement on the banning of lithium exports, it signed a joint REM exploration agreement with Japan.
The shift in mineral-related focus toward Southern Africa is part of broader efforts from Indo-Pacific and Western nations to reduce reliance on China for sourcing REMs - China began investing in Southern African mining before any other major economy. Namibia is one of five African nations included in Japan’s critical mineral strategy designed to reduce dependence on China, which imposed export restrictions on gallium and germanium in July.
Namibian mineral refining represents another opportunity for the United States to challenge China's position in the global mining market. Amos Hochstein, United States Security Envoy, called for more “competition” across “multiple countries,” emphasising the United States’ desire to access REMs without the risk of political friction. Rystad Energy, an energy consultancy, forecasts a significant increase in Namibian lithium output from approximately 5,000 tonnes of lithium carbonate in 2024 to 33,000 in 2030, lifting investor confidence in Namibia’s mining sector.
Whilst the capacity of Southern African nations to produce and process REMs may ease reliance on Chinese processing, China will remain a goliath. Africa’s six largest lithium mining nations could account for approximately 12 per cent of global supply by 2031, stressing the importance of multilateral trade cooperation in transitioning to net zero. Namibia’s mineral wealth means it can become a crucial stakeholder in REM supply chains.
Structural Challenges
Scaling up domestic lithium production will require firms to adjust to Namibia’s new regulatory practices, potentially delaying the launch of new processing plants. Included in the Namibian government’s mining plan is a provision which may allow for the lifting of lithium export restrictions in select circumstances, allowing the export of limited quantities of unprocessed ore at the direction of the Ministry of Mines and Energy. The government's authority in determining export arrangements may impede metallurgical testing, a vital component in the design phase of new facilities, which would further lengthen the testing period of new processing plants and negate potential marginal gains.
The Geingob government continues to battle allegations of corruption in mining, which first emerged in October 2022. Chinese mining firm Xinfeng Investments denies accusations of forgery, acquiring mining licences through bribery, and illegally exporting raw materials to China under the pretence of mineral testing; Namibia’s Business and Intellectual Property Authority has suspended two unnamed officials suspected of facilitating the purchase of lithium mining licences which Xinfeng Investments later acquired. Further, the technical advisor of the Ministry of Mines and Energy, Ralph Muyamba, awarded mining licenses to Orange River Mining, owned by his cousin, worsening suspicions of corruption.
Minister Alweendo’s subsequent amendment of the ministry’s mining licence application process indicates that the Namibian government may not have in place the requisite regulatory framework to eliminate illegal activity but also shows that it is willing to take steps towards mitigating corruption risks. Following the corruption allegations aimed at Xinfeng Investments, the Anti-Corruption Commission re-evaluated the trustworthiness of prospective investors and now requires organisations to provide comprehensive plans detailing how they intend to conduct mining operations in Namibia. The procedure aims to tighten licence procurement procedures and to stop licence-holders from selling them off to third parties. Eliminating shadow markets is essential to fulfilling Namibia’s ambition of increased value-addition in mining; failing to enforce the amendment may deter investment from capable organisations amid concern that Namibia cannot optimally exploit its mineral wealth under current regulations.
Namibia is not the latest African nation to restrict the export of unprocessed minerals. On July 27, the Ghanaian government approved its ‘Minerals of the Future’ policy, an export ban which intends to encourage domestic lithium processing. The broader trend of resource nationalism aims to empower mineral-rich states by increasing their stake in mining operations. Namibia’s decision to ban lithium exports underscores the urgency for the country to strengthen its regulatory framework to capitalise on this significant economic opportunity.