Race for Zimbabwe — EV battery hub of the future

AMID the escalating global endeavours to confront the climate crisis, Zimbabwe, a landlocked southern African nation, is strategically positioning itself as a pivotal player in the global energy transition, fuelled by an unprecedented surge in demand for renewable energy technology.

With a rich history of lithium mining spanning six decades, Zimbabwe is swiftly emerging as a contender in the burgeoning race to meet the soaring demand for electric vehicle (EV) batteries. The Government estimates that the Bikita Minerals, situated 300 kilometres south of the capital Harare, has approximately 65,43 million tonnes of lithium resources, underscoring the nation’s significance in the rapidly evolving landscape of sustainable energy.

Lithium

As multinational corporations engage in fierce competition to secure crucial assets in battery metals, Zimbabwe has become a prime destination. Its status as a mining hub in the African mining industry, coupled with its robust lithium reserves — often referred to as “white gold” due to sustained EV demand — positions Zimbabwe as a key player in the quest for battery metals. Notably, the lithium-ion battery (LiB), a crucial component of EVs, can constitute between a third to half of the EV’s total cost.

With the surging production of EVs and essential electronics crucial for achieving a zero-carbon emission energy transition, Zimbabwe is rapidly ascending global ranks. The heightened demand for EVs, driving the global thirst for lithium, could designate the country as the EV Battery Hub of the Future. Boasting Africa’s largest lithium reserves and ranking sixth globally, Zimbabwe strategically places itself among leading lithium-producing countries like Chile, Australia, China, Argentina and Brazil, underscoring its pivotal role in meeting the escalating demands of a progressively electrified and sustainable global economy.

In the first nine months of 2023, Business Insider reports Zimbabwe generated US$209 million in income from lithium exports. Forecasts predict that lithium mining will contribute approximately US$500 million to Government revenue in 2023, making lithium Zimbabwe’s third-largest mineral export after gold and platinum group metals, which earned US$2,46 billion and US$2,27 billion, respectively, in 2022 — this reinforces Zimbabwe’s growing influence in the global mining industry and solidifies its strategic standing as an EV battery hub.

As a power play unfolds within the country, companies from China, Australia and the United States are aggressively pursuing vital assets in battery metals, with lithium taking centre stage. This strategic move is poised to amplify lithium production across the nation, aligning seamlessly with the prevailing trend. S&P Global Commodity Insights anticipates new investments will boost lithium raw material production on the continent by more than 24-fold between 2022 and 2027. Globally, analysts at McKinsey project a remarkable growth of over 30 percent annually in the entire lithium-ion battery chain, from mining to recycling, surpassing US$400 billion by 2030.

While Australian and US companies race to secure mining assets in Zimbabwe and other African nations with abundant mineral deposits, Chinese companies lead the pack. In the third quarter of 2023 alone, licences awarded to Chinese firms could funnel a staggering US$2,79 billion into Zimbabwe, primarily in mining and energy. This substantial investment — a tenfold increase from the previous year — dwarfs that of its closest rival, the United Arab Emirates, showcasing China’s unmatched commitment to the region.

“In the dynamic landscape of electric vehicle (EV) batteries, Zimbabwe has captured considerable interest from prominent Chinese investors, who have outpaced their American and Australian counterparts in lithium ventures,” said ZhenHua Wang, the general manager of Bikita Minerals, which is engaged in lithium mining and processes 300 000 tonnes of spodumene concentrate and 480 000 tonnes of petalite per year, in a conversation with Business Insider.

“Africa’s significance in China’s strategic initiatives is undeniable, with the nation exerting substantial influence in terms of both quantity and capital commitment, particularly evident in Zimbabwe’s pivotal mining sector. This strategic alignment establishes China as a frontrunner, surpassing global competitors and solidifying its dominant position in shaping the future trajectory of EV battery technology. This trend underscores China’s proactive role in securing a leading position in the rapidly evolving EV market, emphasising the nation’s foresight and assertive approach in navigating the complexities of the global energy transition.”

Chinese investors have spent over US$1 billion to acquire mining sites in Zimbabwe over the past two years, with several Chinese-owned companies completing construction or upgrades of lithium processing plants. Notably, African billionaires are also making significant forays into the lithium mining sector. Among them is Benedict Peters — an influential figure in the global energy sector, the owner of Aiteo Group, Nigeria’s largest indigenous oil producer and arguably the largest private black miner on the continent. Peters has strategically entered the scene through his vertically integrated mining company, Bravura Holdings Ltd, making discreet moves in Zimbabwe.

Bravura Holdings strategically pivots its operations following a significant acquisition in Selous. With an unwavering commitment to staying ahead in this ever-evolving industry, the company is now setting its sights on a substantial lithium deposit in Kamativi — reflecting the dynamic and adaptive landscape of the sector. Bravura is also presently developing platinum, steel, copper and gold assets in other countries across Africa, including Ghana, Nigeria, Democratic Republic of Congo, Namibia, Mozambique, Cote d’Ivoire, Sierra Leone, Guinea Bissau and South Africa.

The influx of billions of dollars in investments in Zimbabwe is seen as a crucial step in the Government’s efforts to revitalise the nation. The mining industry, highlighted as a key component, aims to position Zimbabwe as the world’s largest exporter of lithium, contributing to 20 percent of global demand once fully tapped.

Zimbabwe has weathered over two decades of challenging economic conditions marked by hyperinflation, forex shortages and widespread unemployment. Against this backdrop, the Government under President Mnangagwa is eyeing a strategic shift within the mining sector as a linchpin for national revitalisation, ultimately aiming to establish domestic EV battery plants.

With aspirations to elevate the nation to an upper-middle-income economy by 2030, President Mnangagwa has identified the mining industry as a pivotal driver of this vision. The Ministry of Mines and Mineral Development envisions Zimbabwe becoming the world’s leading exporter of lithium, aiming to supply 20 percent of the global demand once the nation’s lithium resources are fully tapped.

Marshall Comins, the publisher of Billionaires.Africa and a public strategy consultant who provides strategic advisory services to African business and political leaders to manage high-stakes issues and special situations, said: “President Mnangagwa’s decisive moves within the mining sector exemplify a commitment to steering Zimbabwe toward a robust economic future.”

Comins also applauds the Government’s focus on establishing domestic EV battery plants as a masterstroke in the pursuit of national revitalisation. In addition to this he issues a poignant call to action: “Countries like the United States, Canada, Australia, with huge mining assets, need to start taking notice and working harder to enter Zimbabwe.” This underscores the global significance of Zimbabwe’s burgeoning mining sector and challenges traditionally dominant players to reassess their strategies.

President Mnangagwa

With a keen eye on the geopolitical landscape, Comins positions Zimbabwe as a prime arena for strategic partnerships, ushering in an era where a multitude of global players actively engage in and contribute to the nation’s economic revitalisation. He argues that this proactive involvement is imperative to offset the escalating Chinese influence in the sector, asserting, “It’s a means to counterbalance the growing Chinese influence over the sector there.”

Comins issues a compelling call to nations, urging them to strategically position themselves in Zimbabwe. This approach is not merely an economic opportunity but a strategic necessity, aimed at mitigating the risk of undue concentration of influence and fostering a more equitable and competitive global mining industry. He envisions a recalibration of the industry’s power dynamics, ensuring that diverse nations play an integral role in shaping Zimbabwe’s mining landscape.

Highlighting a prevailing trend, he also notes that local lithium claim holders are divesting their stakes due to capacity constraints, citing challenges in resource exploration and production. To overcome this obstacle, he advocates for imperative Governmental intervention, asserting that a dedicated fund is essential to empower local lithium holders for exploration and production endeavours.

In Comins’ view, the Government’s establishment of a fund is critical, stating, “Holders of lithium claims in Zimbabwe are selling them off because they do not have the capacity for exploration or to fund production, so the Government needs to set up a fund for the local lithium holders to be able to do exploration.” This underscores the necessity for a robust financial framework to empower local stakeholders and propel Zimbabwe’s aspirations in lithium mining.

As the Government endeavours to fortify its economic foundations by capitalising on the burgeoning prospects within the mining sector — a formidable industry valued at US$12 billion, constituting 11 percent of the African nation’s gross domestic product — a pivotal legislative stride was taken in December 2022. The enactment of the Base Mineral Export Control Act marked a definitive measure, prohibiting the export of raw lithium.

Noteworthy, however, is the exemption accorded to entities currently engaged in the development of mines or processing plants in Zimbabwe, a category encompassing notable Chinese enterprises such as Sichuan Yahua Industrial Group, Zhejiang Huayou Cobalt, Sinomine Resource Group, and Chengxin Lithium Group. Cumulatively, these firms have injected a substantial US$808 million into lithium projects in Zimbabwe.

Positioned as a strategic manoeuvre, the ban on unprocessed base mineral exports has emerged as a catalyst for heightened investments in the development of lithium assets within the country. Widely regarded as a calculated initiative to foster mineral value addition and curb the illicit trade of raw lithium, this regulatory action compels mines to engage in the processing and refinement of lithium into concentrates before exporting.

The move does not only safeguard the intrinsic value of the country’s mineral wealth but also serves to augment tax revenue, stimulate the emergence of new local enterprises and create employment opportunities. – Business Insider