ZIMBABWE’S lithium industry has revealed a spectacular collapse in global lithium prices forced mining companies to retrench workers and delay multimillion-dollar projects, laying bare the risks facing one of Africa’s fastest-growing suppliers of a mineral central to the global green energy transition.
Speaking at the Chamber of Mines annual conference in Victoria Falls yesterday, Lithium Association of Zimbabwe chairperson Innocent Rukweza said the industry had been blindsided by one of the sharpest commodity price reversals in recent years after lithium prices crashed from about US$86 000 a tonne in 2022 to a low of US$14 300.
“That’s when we saw a huge influx of people coming in and the prices reached a high of US$86 000,” Rukweza said.
“A lot of the projects that we are talking about today were consummated during that period.”
But the boom quickly unravelled.
“As fate would have it, we saw a decline that we have never seen before. Things went south,” he said.
Rukweza said producers initially believed the market would quickly rebound.
“As they were going down, there is a drug that all of us have. It is called hope.
“We were hoping that it would go back to US$86 000.
“We continued to sniff on that drug called hope.
“But things became worse and worse through time.”
Instead, he said, the prolonged slump forced companies to take painful measures.
“We got to a point where we had to retrench. There were project delays,” Rukweza said.
Although prices have recovered to between US$22 000 and US$25 000 a tonne, he warned that the market remains fragile.
“So when you hear people say lithium prices are picking up, the context is important,” he said.
“It is still a far cry from where we used to be. Prices are still volatile.
“They could go back to the US$14 000 mark.”
The downturn has rippled across the global lithium industry.
Prices surged to record levels in 2022 as demand for electric vehicle batteries outstripped supply, triggering a worldwide rush to develop new mines.
However, a flood of new production, particularly from Australia, Africa and South America, coupled with slower-than-expected growth in electric vehicle sales, sent prices into freefall, forcing producers around the world to suspend operations, cut costs and defer expansion plans.
Zimbabwe, which has emerged as one of the world’s fastest-growing producers of hard-rock lithium, has not escaped the fallout.
Chinese mining companies have invested billions of dollars in the country’s lithium sector in recent years, hoping to secure supplies of one of the world’s most strategic battery minerals.
Despite the market downturn, Rukweza said producers remained committed to Zimbabwe’s long-term ambitions of building a domestic battery materials industry.
He said mining companies had already invested US$2 billion in completed projects and were preparing another US$1,45 billion in beneficiation projects, including lithium sulphate plants, concentrators and facilities to recover valuable minerals from mine tailings.
“So together, we are talking about US$3,4 billion that has been put on the table,” he said.
“The number can easily be US$4 billion or US$5 billion.
“This is the level of commitment that we are putting through.”
Rukweza said the industry expected to reach peak annual turnover of US$3,2 billion by 2030, supported by production of about 344 000 tonnes of lithium sulphate, as Zimbabwe moves from exporting raw minerals to processing higher-value battery chemicals.
For Zimbabwe, the lithium crash has exposed the volatility of a commodity that was once seen as the country’s next economic windfall.
While producers remain committed to expanding the sector, Rukweza’s account illustrates how a dramatic collapse in prices has already translated into job losses, delayed investments and a painful reality check for an industry built on the promise of the global clean energy boom.-newsday
