Chinese investors looks to Zimbabwe for lithium mines
HARARE – In the past few months, three Chinese energy companies have acquired controlling stakes in lithium mines in Zimbabwe. China, the largest EV market in the world, is increasingly turning to Africa to diversify its supply of lithium, one of the most sought-after minerals used in the booming production of electric vehicles (EVs). Last November, Chengxin Lithium Group began a string of purchases when it paid US$77 million for a 51 percent stake in Max Mind Investments’ Sabi Star Lithium mine in eastern Zimbabwe.
According to a statement made by Chengxin Lithium to African Business at the time, the investment in Zimbabwe, “an attractive investment destination for Chinese new energy companies,” will increase the reserve of lithium resources available to the top producer of lithium compounds, ensure the company’s access to resources for capacity expansion, particularly abroad, and further boost its competitiveness in the lithium new energy material market.
In Zimbabwe, Max Mind is the owner of 40 mining claims covering 2,637 hectares of blocks containing rare metal deposits. 35 of them are in the exploration and early work stages, while five of them have a total ore resource of 6.883 million tonnes. Zhejian Huayou Cobalt, a manufacturer of lithium-ion batteries, then acquired an 87 percent ownership interest in Zimbabwe’s Arcadia Lithium Project from Australia’s Prospect Resources in December for US$528 million.
Southern African Metals and Minerals and African Metals Management Services own 74% of Bikita Minerals, which was purchased by Sinomine Resource Group on February 8 for $180 million. Zimbabwe boasts the fifth-biggest lithium reserves in the world and the largest in Africa, but due to a lack of investment, the resource has mostly gone unexplored.
The move to a green economy now requires lithium as a crucial raw resource. In order to store extra solar energy, lithium ion batteries are frequently used in the production of electric vehicles (EVs), electric equipment, and solar panels. Battery metal experts claim that in recent years, there has been a huge demand for lithium batteries and electric vehicles due to the push for clean technology initiatives and off-grid power storage.
Demand is anticipated to increase quickly. Analysts claim that the agreements offer an invaluable chance for Zimbabwe to participate in the vital lithium battery value chain, which benefits not only the EV industry but also other renewable energy projects that require energy storage facilities.
These agreements may make it easier for Zimbabwe to transfer technology and increase the country’s capability for early industrial processes in the upcoming year. Given that the price of lithium has been rising rapidly and is anticipated to do so in the years to come, these resource exports may be particularly important financially to alleviate the burden of debt service in the short term.
China has been working to improve its environmental impact assessment procedures for its international operations, under the direction of the Ministries of Ecology and Environment and of Commerce. As a result, the lithium acquisitions would offer a good chance to see how these new policy texts are put into practice in practice, particularly when contrasting Chinese-owned and jointly-owned (with Australian partners) mines.
Therefore, distributing the benefits among stakeholders at local, central, and national levels is a challenge in addition to the major challenge of balancing short-term financial gains and long-term technological and industrial capacities. It takes time to determine if the benefits of these agreements can be realized and divided, which is a major issue for the host government whenever new treasures are discovered. From the standpoint of African countries, they must exercise independence while tackling these possibilities and problems in order to avoid becoming bogged down in geopolitical conflicts and narratives.
According to the Africa Finance Corporation, the worldwide battery and electric business is expanding quickly and is expected to be valued at US$8.8 trillion by 2025 and US$46 trillion by 2050 as people become more aware of the need to pursue net zero carbon emissions. Africa can benefit greatly from the global trend toward decarbonization because the continent is home to important battery minerals including cobalt, copper, lithium, and manganese.