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Lithium find exposes Algeria’s neglected mining sector

Algeria's minister of energy and mines, Mohamed Arkab. The country discovered significant deposits of lithium in 2024 APP via Reuters Connect
Algeria's minister of energy and mines, Mohamed Arkab. The country discovered significant deposits of lithium in 2024
  • Energy took precedence
  • Foreign investment needed
  • Mining laws updated

The discovery of lithium in Algeria is a major economic opportunity – but underinvestment in the country’s mining industry means it could take a decade or more to bear fruit, experts say.

In May 2024, Algeria discovered significant deposits of lithium and other essential climate technology minerals in the southern regions of Tamanrasset and In Guezzam. 

Speaking in late December 2024, Mohamed Arkab, Algeria’s minister of state for energy, mines and renewable energies, said that lithium was the material that would position the country as a major actor in the green technology sector.

As the major ingredient used to make electric vehicle batteries, lithium is a critical mineral and key to the global energy transition.

Annual global demand for lithium is expected to hit 3.3 million tonnes by 2030 – more than triple today’s production of approximately one million tonnes. 

Algeria’s mining sector has historically been dominated by just a few state-owned companies.

The country’s rich mineral deposits – and the companies and infrastructure needed to exploit them – have long been ignored by the state in favour of the country’s highly productive energy industry. In 2016, mining contributed the equivalent of just 0.6 percent of total GDP.

“Algeria’s mining sector was largely underutilised,” says Harry Van Schaik, managing editor for Africa at economic research firm Oxford Business Group, “with economic focus on its extractive industries being primarily directed towards energy investments.”

This underdevelopment of the mining sector and associated industries could pose a challenge in exploiting the newly discovered lithium deposits.

Justinas Liuima, insights manager for industrial at Euromonitor International, tells AGBI: “The potential deposits of lithium and other metals represents a significant opportunity for Algeria to develop its mining industry, diversify its economy, and potentially move upstream in the global value chain.”

Liuima says Algeria “generally lacks production and project management expertise” to be able to exploit these resources and he predicted it could take 10 to 15 years “in the optimistic scenario” for the sector to become viable.

Despite the challenge, Algeria is diversifying away from energy, developing mining and working to attract investment.

A draft law on new mining activities that aims to bring the Algerian mining sector in line with international standards and attract foreign investment reached its final phase in November 2024.

Various other developments aimed at increasing investment in the country are underway or have recently been finalised. A new investment code in 2022 clarified incentives to invest, while the Finance Law in 2023 added further incentives. 

Further, Algiers has established free zones with tax exemptions, adopted a new framework for allocating state-owned land for investment, and launched a digital platform to streamline investment processes.

“Recent developments signal a shift towards revitalising the mining industry,” says Van Schaik. “Previous underinvestment in mining may have been a handicap but Algeria’s prospects for lithium mining currently look promising.”

Van Schaik adds that despite Algeria’s historical unwillingness to open up its economy to outside investors, when it comes to lithium and advanced technology, the country has little choice. Acceptance of this shortfall growing, he says.

“Foreign companies are absolutely instrumental in the exploration and potential exploitation of Algeria’s lithium deposits,” Van Schaik says.

“Even governments that are more closed to foreign involvement are often willing to accept assistance and collaboration from overseas, especially if it improves with capacity building in their own firms in the process of knowledge transfer.”

The May discovery of lithium in Algeria was made in partnership with China’s Ganfeng Lithium.

Given the active role that Chinese companies played in the discovery of lithium deposits, Liuima says it is “very likely” that they will be involved in the further exploitation of the resource, which he believes could increase tensions with the US.

Liuima warned: “The exact impact of these geopolitical tensions is not clear at the moment as mining projects are at the early development stage. However, this would still add more uncertainty to the already volatile global economic environment.”