In a significant development for Namibia’s mining sector, Andrada Mining Limited has entered into a landmark agreement with Sociedad Química y Minera de Chile SA through its subsidiary SQM Australia (Pty) Ltd (“SQM”), a global leader in lithium production, to collaborate on the development of Andrada’s Lithium Ridge asset. In a ringing endorsement for both the asset and for Namibia as a mining jurisdiction, this is SQM’s first lithium partnership in Africa, enhancing Namibia’s position in the global lithium market and strengthening the country’s economic prospects.
Lithium Ridge is a fully permitted mining licence covering an area of approximately 3,300 hectares and located approximately 35km from Andrada’s flagship Uis Mine. It hosts multiple pegmatites with mineralisation including lithium (spodumene dominant), tin and tantalum. The exploration programmes to date have found continuous mineralisation along a 6 km strike length. Reverse circulation drilling intercepted lithium grades of up to 2.13% Li₂O, proving high grade mineralisation that extends at depth.
SQM, a global company that is listed on the New York Stock Exchange and the Santiago Stock Exchange (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A), brings a wealth of knowledge including very relevant lithium expertise and experience of global markets. It develops and produces diverse products for several industries essential for human progress, such as health, nutrition, renewable energy and technology through innovation and technological development. The investment of SQM, therefore, can be seen as an initial step in a burgeoning trend of foreign direct investment into the country, with Andrada as a conduit, that will greatly benefit the Namibian economy.
A Strategic Partnership
The agreement, which is subject to approval from the Namibian Competition Commission, outlines a three-stage earn-in arrangement that underscores the commitment of both companies to the sustainable development of lithium resources in Namibia, with the additional benefit of incentivisation to reach important milestones. The partnership brings invaluable financial and technical expertise necessary for the exploration and development of Lithium Ridge. As part of the agreement, SQM will fund the exploration and, in due course, a Definitive Feasibility Study, ensuring that Andrada can focus on declaring a resource while benefiting from SQM’s vast resources.
Economic Implications for Namibia
This agreement is more than just a business arrangement. This infusion of capital will contribute directly to local economic activity, with SQM’s potential investment of USD20 million over the next three and a half years fundamentally signifying a long-term commitment to developing Namibia’s lithium assets, which will be essential in the global shift toward renewable energy and electric vehicles. Investments like these not only create numerous jobs and stimulate local economies but also enhance skills development within the mining sector. Andrada is committed to the economic empowerment of Namibia and Namibians. Through company policies such as the prioritisation of local suppliers and local employment, Andrada has demonstrable success throughout the company’s tenure in Namibia, including a 99% Namibian workforce and 95% of supply expenditure spent in Namibia. Andrada channels this investment capital and subsequent benefits including skill enhancement from SQM into the local, regional and national economy. This further increases Namibia’s attractiveness as a destination for foreign direct investment.
Value – accretive restructuring for greater efficiency
Prior to concluding the SQM partnership, Andrada restructured its main operating company, Uis Tin Mining Company (“UTMC”) to increase its ownership interest from 85% to 100%, by acquiring the 15% interest held by the Small Miners of Uis (“SMU”). The SMU, an entity established to support the economic development of Namibians in historical mining areas, has been a crucial partner in the successful operation of the Uis Mine and the development of the Andrada’s licenses. The restructuring consolidated the ownership of Uis and Lithium Ridge licences, providing Andrada with the ability to target and expedite the development of the individual mining licences through full operational and strategic control.
The restructure simultaneously advanced Andrada’s empowerment objective through the issue of Andrada listed shares to SMU and Sinco Investments Five (Pty) Limited (“Sinco”), the latter being a consortium of historically disadvantaged Namibians. The restructure therefore enables the SMU and Sinco to benefit from the company’s growth across all its assets including Brandberg West. Importantly, the success of the restructure signified the mutual growth and development of Andrada, and SMU, as partners.
Conclusion
Andrada Mining’s partnership with SQM, and the restructuring of UTMC, together represent a pivotal moment for Namibia, promising to unlock the country’s critical raw materials potential and contribute significantly to its wider economy. As the world increasingly turns to sustainable energy solutions, these developments position Namibia at the forefront of the investment market, providing a foundation for future growth and development. With continued support and successful implementation of these initiatives, Namibia stands to benefit immensely, paving the way for a prosperous mining future.
Contributed by Andrada Mining
