Zimbabwe's lithium mine will provide in 2023 for China's major cobalt refiner

Harare: By year's end, a sizable plant owned by Zhejiang Huayou Cobalt, the largest cobalt refiner in China, will be finished processing lithium in Zimbabwe and delivering its first shipment of lithium in early 2019.

For US$422 million, the battery manufacturer with its headquarters in Shanghai acquired the Arcadia hard-rock lithium mine from Zimbabwean minority stakeholder Prospect Resources, which is listed on the Australian Securities Exchange.

The development of the mine will cost US$300 million, according to Huayou Cobalt, a global leader in renewable energy with a stake in the battery industry, which plans to increase production for the EV market.

According to a Huayou Cobalt spokesman, commercial production at the Arcadia Lithium project will begin in the first quarter of 2023.

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The Zimbabwean mine, which is located not far from the nation's capital, Harare, is regarded as one of the largest hard rock lithium reserves in the world. As more nations take steps to reduce their carbon footprint, lithium, a silvery-white metal, is in high demand as a crucial raw material for lithium-ion rechargeable batteries that power electric vehicles or solar panels that store solar energy.

Before the lithium product was exported, Huayou Cobalt claimed that it was conducting feasibility studies to determine whether it could be enhanced and given more value locally.

We are aware, though, that in order to produce batteries, a number of conditions and requirements must exist, and these are currently lacking in Africa in general and Zimbabwe in particular, a spokesman responded via email.

One of the requirements from the Zimbabwean government when Huayou Cobalt was given the contract was that the company would process the mineral locally to produce lithium-ion batteries. However, the company declared that it would process spodumene and petalite [lithium concentrates] first-line products in the first phase. These would undergo concentrate processing and export.

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Huayou Cobalt declared, "We are not going to export raw ore."

"Lithium is one of many inputs needed to make batteries, and we do not have simultaneous access to all of them. As far as we can currently see is feasible under local conditions, phase two of our work here will target the production of lithium sulphates, the miner said.

The Zimbabwean government set an ambitious goal in 2019 to increase the revenue from mining by more than four times to US$12 billion by 2023. Additionally, it predicts that starting in 2019, lithium exports will bring in US$500 million. It increased its mineral export revenue from US$3.2 billion to US$5.7 billion last year.

This month, Huayou Cobalt announced to Xinhua that it would be "mining 4.5 million tonnes of ore, processing it to create approximately 400,000 tonnes of concentrate, and exporting all of that concentrate."

Trevor Barnard, the deputy general manager of Prospect Lithium Zimbabwe, was quoted by Xinhua as saying that Zimbabwe, with its sizable lithium resources, played a significant role in the lithium value chain and, consequently, in the value chain for renewable energy.

Huayou Cobalt once claimed that it would directly employ 1,000 people, the majority of whom would be Zimbabweans.
However, according to Huayou Cobalt, "our project is creating hundreds of jobs upstream and downstream and, more importantly, benefiting local people, whom we have prioritised for employment opportunities." He also noted that it was creating jobs both directly and indirectly in Zimbabwe's significant mining industry.

Zimbabwe recently experienced a lithium rush, with several Chinese companies investing millions of dollars to secure lithium supplies in the midst of the global race to go green. According to reports, Zimbabwe has the fifth-largest lithium reserves in the world and the largest in all of Africa.

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The lack of investment in the nation, which two decades ago received sanctions from Western countries for violating human rights and taking land from white farmers, has prevented the resource from being fully utilised.

State-run China Nonferrous Metal Mining Group also revealed in February that it was acquiring a lithium project in Zimbabwe in addition to Huayou Cobalt. It bought Bikita Minerals, the nation's first lithium producer, for US$180 million through its subsidiary Sinomine Resource Group.

Another deal involving mining rights for the largely unexplored Sabi Star lithium tantalum mine project in eastern Zimbabwe, which Chengxin Lithium Group characterised as "an attractive investment destination for Chinese new-energy companies" looking to increase lithium reserves, was completed last year for US$77 million by the Shenzhen-listed lithium materials producer Chengxin Lithium Group.

A significant supplier of raw materials for EV batteries has also emerged: the Democratic Republic of the Congo. It is the biggest source of cobalt in the world, which is needed to make batteries for laptops, smartphones, tablets, and electric vehicles. The DRC, which supplies more than 70% of the world's cobalt, is where China, the largest manufacturer of lithium-ion batteries, gets the majority of its cobalt.

At the commodities consultancy CRU Group, Martin Jackson, a senior analyst for battery metals, said that securing raw materials for battery and EV production had become crucial for advancing OEM [original-equipment manufacturer] strategies.

Without it, future shortages could significantly raise the cost of manufacturing electric vehicles or limit production, as was the case with the semiconductor shortage, he warned.

Jackson predicts that the initial effects of the Zimbabwean lithium will be minimal when it first enters the market the following year.
Its capacity will be less than 5% of production by next year, and ramping up production will take some time, he added.

According to Chris Berry, president of the New York-based commodities advisory firm House Mountain Partners, China has shown to be unbiased when it comes to the origin of lithium or other battery metals.

It makes sense that Chinese investment in battery metals would flow to other parts of the world, such as Zimbabwe, Berry said, given the geopolitical tension between the US, EU, and China.

The lithium market was not likely to be significantly impacted by Zimbabwean lithium, according to him, but any battery-grade lithium that could be produced in the ensuing years would be in great demand.

"Whether we are talking about lithium or cobalt, the Chinese will continue to dominate cobalt production in the DRC for a very long time."

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