Zim’s ban on lithium exports attracts more investments

Sifelani Tsiko-Agric, Environment & Innovations Editor

Last December, when Zimbabwe banned the export of raw lithium to encourage investment in local processing facilities, there were unfounded 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 raw 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.

Speculators 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.

Despite all the fears and skepticism, Zimbabwe has maintained the ban on raw lithium exports.

In fact, the ban on raw lithium exports 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), 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.

Brewer hailed Zimbabwe’s decision to ban raw lithium 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,” he said. “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.

“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 global 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.

Zimbabwe’s move to ban raw lithium exports, contrary to critics, has further strengthened the country’s improving reputation as one of the safer places for foreign investors in Africa.

Fears that the ban amounted to “nationalisation” of the country’s lithium sector have all been quashed.

What the Government is doing to seek a bigger role to press the private mining sector to build a domestic processing industry that protects the environment, creates jobs and boosts earnings for the economy and its people.

Lithium, dubbed as ‘white gold’ is a mineral used as a component in electronic batteries for mostly cars, cellphones and computers.

It has emerged as one of the most valuable minerals in recent decades and its price has gone up by more than 1 100 percent over the past few years.

Zimbabwe is setting the pace and if more African countries ban the export of raw lithium and other key minerals, the world will be set for a more equitable sharing of mineral resources and earnings.

China, US, and all other industrial economies all want minerals and when they meet Africa’s interests to enhance beneficiation this will widen the share of the fruits globally. Apart from benefits, it will also help countries such as Zimbabwe and most other African countries to increase their uptake of renewable energy, helping reduce their carbon footprints.

Gorden Moyo, director of the Public Policy and Research Institute of Zimbabwe hailed the export ban saying it was an important catalyst to break the long-standing reliance on export of raw minerals with little returns.

“It makes perfect economic sense for Zimbabwe and all other countries to break the vicious circle of commodity export,” he was quoted saying.

“Raw materials fetch low prices in the global markets while at the same time exporting commodities is equivalent to exporting jobs.

“If well managed, the massive lithium deposits in Zimbabwe may contribute towards public debt settlement, job creation and increased economic activity in the country.”