Three Chinese energy firms have snapped up controlling equity in Zimbabwean lithium mines over the past four months, as the world’s biggest electric vehicles market takes a strategic position in Africa.
Growing interest in Zimbabwe by Chinese companies is meant to diversify the supply of lithium, a much sought after mineral used in the manufacture of EVs.
Chengxin Lithium Group started the spate of acquisitions last November with the acquisition of a 51 percent interest in Max Mind Investments’ Sabi based Star Lithium Mine in eastern Zimbabwe at a cost of US$77 million.
Chengxin Lithium described Zimbabwe as, “an attractive investment destination for Chinese new energy companies”, which would increase its lithium resource reserve.
Further this would guarantee resource supply for capacity expansion, especially abroad, and further enhance its competitiveness in the industry of new lithium energy material.
Max Mind owns 40 mining claims of rare metal ore blocks in Zimbabwe, covering a total surface of 2 637 hectares. Five of them have a total ore resource of 6,883m tonnes while the remaining 35 mining claims are in exploration and the early work stage.
Another Chinese lithium-ion battery producer Zhejian Huayou Cobalt followed in December by purchasing an 87 percent stake in Zimbabwe’s Arcadia Mine lithium project for US$528 million from Australia’s Prospect Resources.
On February 8, 2022 the Sinomine Resource Group announced that it had shelled out US$180 million to acquire 100 percent of African Metals Management Services and Southern African Metals and Minerals, which jointly own 74 percent of Bikita Minerals.
Zimbabwe possesses Africa’s largest lithium reserves and the fifth largest globally but the resource has remained largely untapped due to a lack of investment.
Lithium ion batteries are commonly used in the EV manufacturing industry and in lithium batteries for electric devices as well as solar panels to store excess solar energy.
Battery metal specialists say the drive for clean technology initiatives and off-grid power storage has created an enormous demand for lithium batteries and electric vehicles in recent years. Demand is expected to accelerate rapidly.
Analysts say the deals provide precious opportunities for Zimbabwe to get involved in the crucial value chain of lithium battery industries not only for the EV industry, but for other renewable energy projects that also need energy storage facilities.
“These deals can facilitate technology transfer to Zimbabwe and enhance their preliminary industrial process capacity in the coming year. Financially, these resource exports can be particularly crucial to relieve the debt service pressure in the short run as the price of lithium has been and is expected to continue to rise sharply in the coming years,” analyst Prosper Chitambara said.
He noted that China had been developing more stringent environmental impact evaluation systems for its overseas activities, led by the ministries of Ecology and Environment and Commerce.
As such, the lithium deals would provide good opportunities to see how these new policy documents are implemented on the ground, particularly in comparing Chinese-owned and jointly-owned (with Australian partners) mines.
“So, beyond the big challenge to balance short-term financial gains and long-term technological/industrial capacities, there is also a challenge to distribute the benefits between stakeholders at local, central and national levels.
“These deals present potential benefits and it takes time to see if these benefits can be achieved and distributed, which is always a big challenge for the host government when new treasures are found. From the perspective of African governments, they need to make autonomous decisions when addressing these considerations on opportunities and challenges without being trapped in geopolitical struggles and narratives,” he said.
The Africa Finance Corporation says as the world becomes more conscious of the need to pursue net zero carbon emissions, a global battery and electric industry is growing at a fast pace and projects its worth at US$8,8 trillion by 2025 and US$46 trillion by 2050.
Because Africa is home to key battery minerals such as cobalt, copper, lithium and manganese, the continent can profit immensely from the global movement towards decarbonisation.