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Africa’s long-held dream of hosting its first cobalt refinery appears within reach, as the Nigeria-based Africa Finance Corporation (AFC) signed a memorandum of understanding (MoU) with Kobaloni Energy last week. This agreement provides a potential $100 million lifeline for the construction of a cobalt sulphate refinery in Zambia, potentially revolutionizing the continent’s role in the battery metal supply chain.
“This represents a significant step forward for Africa’s ability to capture greater value from its cobalt resources,” said Samaila Zubairu, CEO of AFC, in an interview with Reuters. “The project aligns perfectly with our strategy to invest in transformative infrastructure that unlocks Africa’s potential.”
Currently, China dominates the cobalt refining landscape, processing roughly 75% of the world’s supply. This lack of domestic refining capacity forces African nations to export raw cobalt at lower prices, missing out on the higher value-added downstream segments.
“Developing our own refining capacity is crucial to maximizing the benefits of our cobalt resources,” stated Mick Davis, mining veteran and co-founder of Kobaloni Energy, in a press release. “This project has the potential to create jobs, attract further investment, and establish Zambia as a key player in the battery metals industry.”
While the MoU signifies a positive development, challenges remain. The final investment decision by AFC rests on further due diligence and market conditions. Additionally, concerns exist regarding fluctuating cobalt prices and potential oversupply in the future.
“The project’s feasibility depends heavily on securing offtake agreements with battery manufacturers,” cautioned analyst Peter Major of CRU Group. “Cobalt prices have fallen significantly in recent months, and competition from other producers like Indonesia will be fierce.”
Despite the hurdles, the potential benefits of a successful refinery are undeniable. The project is estimated to create 1,000 jobs directly and indirectly, contribute significantly to Zambia’s GDP, and position the country as a preferred sourcing destination for ethical and sustainable cobalt.
“This project could be a game-changer for Zambia and Africa as a whole,” concluded Zubairu. “By creating value at home, we can drive economic growth, create jobs, and empower local communities.”
