Zimbabwe’s ban on lithium exports attracts more investments

Last December, when Zimbabwe banned the export of raw lithium to encourage investment in local processing facilities, there were fears that this would deter investment in mining and risk stalling the clean energy transition.

Zimbabwe, with the largest reserves of lithium in Africa, took a bold step and banned all lithium exports after the Government argued smuggling of the sought — after mineral to South Africa and the UAE was costing the country US$1,8 billion in lost mining earnings.

The announcement sent tremors in the global mining industry with some investors raising red flags that this would scare away investors.

Speculators also played the wait-and-see game, hoping Zimbabwe would not be able to sustain the ban for a long time.

Many quietly speculated the country would make a U-turn and allow the export of raw lithium.

Exporting it as a raw material and not processing it into finished products was bleeding Zimbabwe through lost earnings and employment generation.

Skeptics felt banning lithium exports was one thing and sustaining the ban, quite another.

Mr Chris Berry, president of the commodities advisory firm, House Mountain Partners, in New York feared that Chinese firms would stop lithium investments in Zimbabwe as building processing facilities here would be costly.

“There is a great deal of capital required to build chemical conversion facilities outside of China, not to mention the two or three-year lead time necessary to actually complete construction and commissioning,” he was quoted saying.

Mr Berry also feared that if more countries followed suit, it could have wider implications, such as higher prices for lithium and other raw materials. Other global mining giants also speculated that the ban could force investors to divert their investments to countries without tighter bans.

Local miners were also jittery about the ban saying it would lead to loss of foreign currency revenue for the country.

Despite all the fears and skepticism, Zimbabwe has maintained the ban.

What is surprising is that the ban has actually elicited the opposite: more investment in lithium processing facilities.

Several Chinese mining companies are aggressively heeding calls by the Government to open lithium processing plants.

China’s Huayou Cobalt commissioned a processing plant at Arcadia Lithium Mine which has since successfully produced the first batch of lithium products under trial production.

For most Chinese mining companies, it has not been challenging to place their capital on the plants and this has paved the way for other players to invest in the country’s lithium mining industry.

Three Chinese companies – Zhejiang Huayou Cobalt, Sinomine Resource Group and Chengxin Lithium Group have invested massively in lithium projects in Zimbabwe, totalling US$679 million over the past three years.

Huayou Cobalt and Chengxin Lithium are developing processing plants and heeding Government calls.
China Sinomine Resource Group operates Bikita Minerals Lithium Mine in Masvingo — the country’s largest lithium mine with an estimated 11 million tonnes of lithium ore reserves while Shenzhen-listed Chengxin Lithium Group acquired a 51 percent interest stake in Sabi Star Lithium Mine in eastern Zimbabwe for US$77 million.

There are several Chinese investors and others from elsewhere who are moving into various parts of the country to harness lithium ore reserves.

United Kingdom (UK) listed firm, Marula Mining has announced plans to establish a valued-added lithium operation Muchai Mining in Bikita in the southern and central province of Masvingo.

Marula Mining chief executive officer (CEO), Mr Jason Brewer was quoted saying that his mining firm was piloting a process for value-added lithium in South Africa and that the plan would be extended to Zimbabwe, where the company has lithium projects under consideration, as well as to Zambia and Tanzania.

Mr Brewer hailed Zimbabwe’s decision to ban raw exports saying this helped Zimbabwe not to become like western Australia, where iron ore is extracted and shipped without any value addition.

“They’re not interested in seeing merely a hole in the ground. They desire to witness construction,” he said.

Lithium value addition, he said, was the way to go.

“It’s only going to happen if countries take decisions like Zimbabwe. You have to give a nudge in the right direction.”

Zimbabwe is not stopping. It is going full-steam ahead to recalibrate its lithium policies to benefit the country. Recently, the country approved the Lithium Ore Policy to consolidate the country’s beneficiation strategy and reap more earnings from the country’s minerals putting a lid to the export and smuggling of lithium bearing ores.

The Government is stamping its authority and bringing sanity to the lithium industry which was marred by chaos over the last two years with little or no benefits accruing to the economy.

Players took advantage of a lack of a coherent policy framework for lithium mining and smuggled the raw mineral out of the country.

Cabinet approved the Lithium Ore Policy and a Statutory Instrument to guide and permit processing at Approved Processing Plant (APP), or for sale to those with APPs locally.

“Any individual and or entity wishing to process lithium ores will be required to construct an Approved Processing Plant locally, ore movement permits for lithium ores will only be issued where such ores are destined for a local Approved Processing Plant,” said Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa.

Minister Monica Mutsvangwa

“Lithium ores can only be stored at the mining site where such ores were mined, or at an approved for local Approved Processing Plant, any entity will require a Lithium Ore Purchase Licence to buy ores from miners. A local Approved Processing Plant will be a condition for getting the Lithium Ore Purchase Licence.

“All players in the lithium sector, whether miners or holders of Approved Processing Plant, shall submit a summary of monthly reconciliations of ore movements to the Ministry of Mines and Mining Development.

“For any material to qualify as a concentrate for approval for export, it shall meet the minimum set technical specifications and the minimum selling price as set by the Minerals Marketing Corporation of Zimbabwe on a regular basis.”

Official figures indicate that Zimbabwe produced 1,200 tonnes of lithium in 2021, making it the sixth-largest miner globally behind Brazil (1 900 tonnes), Argentina (6 200 tonnes), China (14,000 tonnes), Chile (26 000 tonnes) and Australia (55 000 tonnes).

The country is now targeting to get higher returns from the commodity given the growing appetite for lithium across the world.

Lithium is in high demand across the world as countries are targeting to reduce emissions and environmental degradation. Most countries are aiming to transition to a climate-friendly electric car to cut the use of petroleum-powered engines which are among the biggest polluters of the environment.

Lithium has emerged as a leading mineral which is expected to spur Government’s plans to grow the mining industry to earn about US$500 million a year.

Demand for lithium, a core ingredient in electric vehicle batteries, is soaring as automakers move away from gasoline and diesel powered models.

This has emboldened the Government to press investors to build processing facilities locally to help create jobs, boost foreign currency earnings and benefit the local economy in many ways.

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