Ghana’s bold plan to refine its lithium domestically has come under critical scrutiny following a recent report by the Natural Resource Governance Institute (NRGI). The think tank warns that establishing a local lithium refinery could cost the country dearly—potentially leading to a loss of at least $500 million in government revenue compared to exporting unprocessed lithium concentrate.
Speaking to CNBC Africa, NRGI’s Africa Senior Economic Analyst Thomas Scurfield stressed the importance of strategic thinking in resource management. He cautioned that although value addition is often a desirable goal, it must be economically viable—something Ghana’s current lithium refining plan may not achieve.
‘The challenge lies in Ghana’s limited access to competitively priced feedstock and stiff global competition, especially from countries like China,’ said Scurfield.
Refining at home may not pay off
According to the NRGI report, refining lithium locally would not only involve high upfront costs but also make Ghana compete against well-established global players with far cheaper production models. China, for example, benefits from low-cost capital and economies of scale that would be difficult for Ghana to match.
Without a consistent and affordable supply of raw lithium, the report suggests that Ghana’s proposed refinery would struggle to operate profitably. As a result, the government would likely earn less than it would by simply exporting the raw concentrate.
A smarter path: ‘mine and monitor’
Rather than rushing into expensive infrastructure development, the report recommends Ghana adopt a ‘mine and monitor’ strategy. This means focusing first on launching lithium mining operations while keeping a close eye on how the global refining market evolves.
‘It’s not about saying no to value addition,’ Scurfield explained. ‘It’s about ensuring countries like Ghana make these decisions based on independent, sound economic analysis.’
This phased approach could allow Ghana to pivot to domestic refining if and when market conditions become more favourable.
EV potential still promising
Despite current challenges, the long-term outlook for lithium remains positive—particularly as electric vehicle (EV) manufacturers expand their global reach. The geopolitical push to diversify away from China-dominated supply chains presents a potential opening for African producers.
Ghana’s national electric vehicle policy and its emerging auto manufacturing sector may position it well to capitalise on this shift. While Scurfield acknowledges it could take time for Africa to develop a significant EV market, the foundations being laid today could prove valuable tomorrow.
Opportunity demands strategy
The NRGI’s findings serve as a cautionary tale against rushing into value-added industrial projects without thoroughly evaluating their feasibility. For Ghana, the smarter route may lie in starting with extraction, tracking global trends, and making informed decisions when the time is right.
By adopting a flexible, evidence-based approach, the country stands a better chance of maximising the value of its lithium resources without incurring unnecessary financial risks. (Africabriefing)
