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Chinese investment in Zimbabwean lithium

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Chinese investment in Zimbabwean lithium

The global demand for lithium is experiencing rapid growth, primarily fueled by the rising popularity of electric vehicles and electronic devices crucial to the energy transition. This burgeoning market represents a promising opportunity for Zimbabwe’s economy, given its substantial reserves of lithium.

Zimbabwe : Africa’s largest lithium mine

Zimbabwe boasts the largest lithium deposits in Africa, positioning it as the sixth-largest lithium producer globally, trailing behind Chile, Australia, China, Argentina, and Brazil. The exploitation of this valuable resource holds the potential for unprecedented economic development for the country, provided that management practices are transparent and respectful of human rights.

The Minister of Mines and Mining Development in Zimbabwe lauds the nation’s lithium reserves and their potential economic benefits. « Investment in the exploration and discovery of new battery mineral deposits could significantly boost national revenue through exports to international markets, with China being a key destination. » Presently, Zimbabwe hosts seven mining projects, predominantly operated by Chinese companies, which contribute significantly to the government’s revenue stream.

While China offers a substantial market and revenue source for Zimbabwe, over-reliance on this partnership could potentially hinder the country’s economic diversification and growth prospects. Despite ongoing poverty challenges, Zimbabwe recognizes the importance of leveraging all available financial sources. Notably, lithium exports were valued at USD 209 million in the first three quarters of 2023, underscoring the significance of this mineral resource to the nation’s economy.

China’s role in lithium mining

China’s involvement in mining activities in Zimbabwe has witnessed exponential growth, with recent reports highlighting significant acquisitions of lithium mining projects by Chinese companies. Notable transactions include :

  • Zhejiang Huayou Cobalt’s acquisition of Prospect Resources’ Arcadia lithium project for 422 million USD in 2021.
  • Sinomine Resource Group’s acquisition of Bikita Minerals, a lithium mine in Masvingo Province boasting reserves of 65 million tonnes. Once fully operational, the mine is expected to produce 300,000 tons of spodumene concentrate annually, a premium lithium source mineral.
  • In July 2023, Prospect Lithium Zimbabwe, a subsidiary of Zhejiang Huayou Cobalt, launched a 300 million USD lithium processing plant in Goromonzi.

Several Chinese mining companies, including Chengxin Lithium Group, Yahua Group, and Canmax Technologies, are actively engaged in Zimbabwe’s mining sector. Over the past two years alone, these companies have collectively invested more than 1 billion USD in acquiring and developing lithium projects in the country. This influx of Chinese investment underscores the growing importance of Zimbabwe as a key player in the global lithium market and highlights the strategic partnership between China and Zimbabwe in the mining sector.

Chinese investment in Zimbabwe

On November 1, Bloomberg reported that Chinese companies are receiving 2.79 billion USD in investments in Zimbabwe, mostly in the mining and energy sectors. In fact, there are many Chinese investors in this country, including Eagle Canyon International Group Holding Limited and Pacific Goal Investments. These two companies signed a local 13 billion USD agreement to build a « mine-to-energy industrial park » for the production of lithium-ion batteries. In March 2023, China Natural Resources entered into an acquisition agreement with Williams Minerals (Pvt) Ltd, a US-based company, for lithium mining rights in Zimbabwe.

The third China-Africa Economic and Trade Fair attracts over 100,000 visitors and results in 74 cooperation projects and agreements with a total value of 10.3 billion USD. Harare is eager to partner with Beijing and attract Chinese investment. According to the Chinese Embassy in Zimbabwe, bilateral trade reached 2.43 billion USD in the first nine months of 2023.

Lithium reserves and exploitation

In addition to Chinese companies, Australian investors are leading the Step Aside lithium project. The government owns 65 % of the mining company Kuvimba, which is conducting lithium exploration at the Sandawana mine. The remaining 35 % is owned by private investors. However, Westerners remain reluctant to invest in Zimbabwe due to concerns about human rights, risk of sanctions, political instability, investment security and reputation. For example, the Australian company Prospect Resources is selling its mining rights to a Chinese exporter active in Zimbabwe’s lithium industry.

More and more people in lithium-rich regions of the country are beginning to extract the element as a source of income. With few opportunities for formal employment in the country, miners are taking the plunge with full knowledge of the risks involved. Mines have limited access to clean water, lack sanitary facilities, and do not provide workers with adequate personal protective equipment.

Reports indicate that as of November 2022, the Sandawana mine employed approximately 5,000 artisanal miners, foreign actors involved in lithium mining and trading. In addition, the Zimbabwe Environmental Law Association (ZELA) locates artisanal miners in Mutoko, Chiredzi, Goromonzi, Mberengwa and parts of Buhera districts. These workers use rudimentary tools to extract lithium ore, which is then exported by Chinese, South African or Indian buyers. The commodity is sold to foreigners at competitive prices, ranging from 100 to 150 USD per ton.

Ban on raw lithium exports

The Zimbabwean government is well aware of lithium’s strategic importance and lucrative potential. In 2022, Harare decided to ban the export of raw lithium in order to encourage local processing by refining battery grade lithium. Like the graphite industry of Madagascar which creates jobs and increases tax revenue.

As part of this approach, companies will be required to adopt responsible sourcing standards. In the same vein, the ZELA organization advocates opening up the sector to other investors to counter China’s monopoly. However, the ban does not affect mining companies that already have processing facilities, including many Chinese companies. In addition, the export of raw ore is still possible, subject to ministerial approval.

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