(Ecofin Agency) - Chilean company Sociedad Quimica y Minera (SQM), the world’s second-largest lithium producer, is entering Africa with its first project in Namibia. Despite the recent drop in lithium prices, SQM expects them to rebound driven by growing demand for the mineral which plays a critical role in the global energy transition.

SQM has received approval from the Namibian Competition Commission (NaCC) to acquire up to a 50% stake in the Lithium Ridge project. South Africa’s Andrada Mining, owns the project, through its subsidiary, Grace Simba Investments (GSI). Andrada announced the deal’s approval on February 28, 2025.

Under the agreement signed in September 2024, SQM will invest in stages. First, it will pay a $2 million participation fee and acquire an initial 30% stake by funding $7 million in exploration over 18 months. Later, it will be able to increase its stake to 40% by investing an additional $13 million over two years. Finally, it can reach a 50% stake by committing up to $40 million or completing a feasibility study on the deposit, which is considered a "potential world-class resource."

Andrada Mining will remain the project operator and will receive a "success bonus" if the lithium resources exceed 40 million tonnes. 

"We are delighted to receive the Competition Commission's approval for the earn-in agreement with SQM. This approval is the final component required for us to fully launch what will be a transformative partnership with one of the world's largest lithium chemicals producers,” said Anthony Viljoen, CEO of Andrada Mining.

Mark Fones, managing director of SQM International’s lithium division, added: "We are delighted that the Namibian Competition Commission granted approval for our earn-in agreement. With all conditions precedent met, we are set to begin exploration at Lithium Ridge. This milestone marks a key step in the expansion of our lithium asset portfolio, reinforcing our commitment to the global energy transition."

Located in Namibia’s Erongo region, Lithium Ridge is SQM’s first African venture. 

Despite falling lithium prices in 2024, mining companies and governments remain optimistic about long-term demand. The International Energy Agency (IEA) predicts global lithium demand will increase more than tenfold by 2050 under net-zero emissions scenarios.

This article was initially published in French by Walid Kéfi

Edited in English by Jason Ange Quenum