AMN - Not much is shining in minerals arena ... but three radiate

There are very few mineral commodities whose prices are shining but lithium, once used as Coca Cola’s competition, is showing some very serious market moves of late, as are phosphate and potash.

The death of mining is affecting the industry worldwide, but particularly in Africa. For many countries on the continent mining is the main source of foreign exchange income.

Take for instance Zimbabwe, where mining forms the biggest part of its economy. Last year the economy suffered a 7.2% drop in foreign exchange from $1.95 billion to $1.81 billion.

Zimbabwe’s biggest producer of ferrochrome sacked most of its employees as output dropped 48%.

South Africa is not faring much better. Last year, mining companies used less power than they did in 2007, unemployment is a hotbed of tinder ready to flare with tens of thousands of jobs threatened. As Anglo moves to close more than half of its mines, its workforce is going to reduce from 85,000 to 50,000.

Meanwhile in Zambia, where mining is 70% of foreign income, there has been a serious dip in mineral exports.

The major mining houses such as BHP Billiton, Rio Tinto and Glencore have seen their value cut in half this year. Metal prices fell 27% last year, the steepest since 2008 during the height of the global financial crisis. China, the biggest buyer of mineral exports, has recorded its slowest growth in a generation.

While most minerals have taken a hammering, three are standouts – lithium, phosphate and potash.

Lithium is used to make rechargeable batteries and Tesla has certainly given this once common band aid for some mental health problems a new life.

Meanwhile phosphate and potash, used in fertilisers have held their price well. Phosphate rock reached a 12 month high of $123 per tonne and potash $300 per tonne.

The price has increased for phosphate and potash because they have less exposure to China and furthermore, Africa is increasing the acreage under food production as its population booms.

The two nutrients have no substitutes. Farmers take nutrients out of the soil, and they must replenish them or production falls. Africa’s growing urbanisation also means that demand for food grows which augers well for agricultural countries such as Eritrea, Congo-Brazzaville, Senegal, Gabon and Angola.

- Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the African continent. Contact:yolanda@yolandatorrisi.com