African Reserves Loans

Zimbabwe holds Africa’s largest lithium reserves

Zimbabwe holds the largest lithium reserves in Africa, the fifth largest in the world, with its province of Masvingo hosting the Bikita mine – site of the world’s largest known metal deposit at around 11 million tonnes.

The resource, however, remained largely untapped for decades due to a lack of investment.

But growing global demand for electric vehicles has seen Bikita and other Zimbabwean mines attract more Chinese companies in recent years, making the southern African country China’s next frontier for the key vehicle battery component. electrical.

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In February, the state-run China Nonferrous Metal Mining Group announced it would acquire a lithium project in Zimbabwe, the latest Chinese giant to make multimillion-dollar acquisitions to secure lithium supply. lithium in the global race to go green.

Sinomine Resource Group (Sinomine), a subsidiary of China Nonferrous, paid $180 million to acquire full control of two private companies that jointly owned 74% of Bikita Minerals, the country’s oldest lithium producer.

The Bikita mine was originally opened in 1911 for tin mining, with lithium mining only beginning in 1953. A 2021 British Geological Survey report said it was the only mine in Africa producing lithium, although it has not yet been used in battery supply chains.

In a meeting with Zimbabwean President Emmerson Mnangagwa in April, Bikita Minerals managing director and Sinomine director Wang Zhenhua promised to help the government reach $12 billion in mining output. here 2023.

Bikita Minerals managing director Wang Zhenhua met Zimbabwean President Emmerson Mnangagwa in Harare in April. Photo: Handout alt=Bikita Minerals Managing Director Wang Zhenhua meets Zimbabwean President Emmerson Mnangagwa in Harare in April. Picture: Document>

Sinomine is just the latest in a series of Chinese lithium acquisitions in Zimbabwe, a country that has faced more than two decades of Western economic and political sanctions first imposed under the regime of the late former President Robert Mugabe, who was ousted in 2017.

The deal comes shortly after Shanghai-listed Zhejiang Huayou Cobalt acquired the Arcadia hard-rock lithium mine just outside Zimbabwe’s capital Harare last December for $422 million. . This was followed by a US$300 million project to develop the mine, which is expected to deliver the first batch of lithium in 2023.

Also last year, Chengxin Lithium Group spent US$77 million on a deal that included mineral rights in the largely unexplored Sabi Star lithium-tantalum mine project in eastern Zimbabwe, described by the listed company. in Shenzhen as “an attractive investment destination for new Chinese energy companies”. seeking to increase lithium reserves.

The silvery-white metal is in high demand as an essential raw material for lithium-ion batteries that power electric vehicles, as more countries strive to reduce their carbon footprint.

Chris Berry, president of commodities consultancy House Mountain Partners in New York, said the flurry of Chinese investment was aimed both at the structural shortage seen in the lithium market and at extending Beijing’s reach in Africa through the Belt and Road initiative.

“Zimbabwe is not the only destination for Chinese lithium,” Berry said, citing investment by battery materials producer Ganfeng Lithium in Mali, and recent rumors that Chinese multinational BYD was in talks to buy six lithium mines in Africa that could supply up to 1 million tonnes of metal per year.

“Chinese companies are not ‘afraid’ of investing in Africa in the same way as Western investors. This is China’s game to lose,” he said.

The Bikita Minerals lithium mine in Masvingo Province, Zimbabwe, is believed to be the largest known deposit of the metal in the world. Photo: Handout alt=The Bikita Minerals lithium mine in Masvingo Province, Zimbabwe, is believed to be the largest known deposit of the metal in the world. Picture: Document>
However, it will take time before Zimbabwe can compete with established lithium producers.

“I’m not sure Zimbabwe will ever be a major lithium producer like Chile or Western Australia are,” Berry said. “This is mainly due to the historical instability of the country as well as the fact that lithium assets in other countries are of higher quality.”

Stephen Chan, professor of politics and international relations at the School of Oriental and African Studies in London, said Zimbabwe remained out of favor as a location for Western companies due to economic instability and the political uncertainty.

“The Chinese are able to achieve preferred investor status thanks to a huge influx of aid, loans and foreign direct investment into the country – a classic case of the Chinese preferring to consider long-term prospects despite the short-term costs,” Chan said.

He said the world needed lithium and the supply from places like the Democratic Republic of Congo (DRC) was surrounded by controversial issues like child labour.

“Total global lithium reserves are estimated at just 14 million tonnes,” Chan said, warning that as demand grows with the world shifting away from pure fossil fuel dependence, “available reserves will be depleted by here a decade”.

He said China was the world’s fourth largest producer of the metal, but its reserves were only 1 million tons. So Zimbabwean lithium, provided there is a lot of tonnage in the mines, would actually power Chinese industry first and foremost.

The DRC has also become a key source of raw materials for electric vehicle batteries. Chinese mining giant Zijin is embroiled in a legal battle with Australian minerals AVZ over control of the Manono mine in the DRC, believed to hold the world’s largest lithium deposit.

The British Geological Survey 2021 said significant natural lithium resources and mining potential could present an opportunity for many African countries to help meet increased demand, including Zimbabwe, Namibia, Ghana, DRC and Mali.

However, there was significantly less engagement in critical steps further down the supply chain, according to the study. “Currently, Africa has very little capacity for processing lithium ore, further refining lithium chemicals or manufacturing battery components,” he said.

“This leads to a typical situation where mineral concentrate is exported; value is added outside of Africa, and products using lithium-ion batteries are then imported.”

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice journal on China and Asia for over a century. For more SCMP stories, please explore the SCMP app or visit the SCMP Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

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