Chinese Mining Giants Collaborate with Zimbabwe on Lithium Project

Chinese mining companies Zhejiang Huayou Cobalt and Tsingshan Holding are moving forward with a lithium mining project in partnership with a Zimbabwean state-owned firm, despite a significant decline in lithium prices. They are conducting a feasibility study for a mine and processing facility at Sandawana, with an anticipated $250 million to $300 million investment and a projected output of 500,000 tons of lithium concentrate annually. The investment reflects confidence in the long-term viability of the lithium market, even amid current challenges.

Chinese mining corporations, including Zhejiang Huayou Cobalt Co. and Tsingshan Holding Group Co., are advancing plans to develop a lithium deposit in Zimbabwe, collaborating with a state-owned enterprise despite significant recent declines in lithium prices. A feasibility study is currently being undertaken for the establishment of a mining and processing facility at Sandawana, located in the southern part of Zimbabwe. This initiative follows the growing recognition of Zimbabwe as a pivotal contributor to the global lithium market, particularly following a surge in lithium prices during 2021 and 2022 that attracted considerable Chinese investment. Both mining firms are already operational within Zimbabwe and are investing an estimated $250 million to $300 million into this project. The anticipated output is approximately 500,000 tons of lithium concentrate per year, according to Trevor Barnard, the acting CEO of Kuvimba Mining House, the owner of the asset. Notably, Barnard remains optimistic regarding the viability of the project despite the current low prices, asserting “Our economics show that we will still be a profitable business even at the current pricing levels.” In the broader context, while lithium spot prices have decreased by nearly 90% since late 2022 due to a surplus in supply aligning with lower-than-expected demand for electric vehicles, significant investments from Chinese companies indicate a continued commitment to securing essential resources for domestic refinements. Furthermore, lithium mining and exploration activities are on the rise throughout Africa, including regions such as Namibia, Mali, Ghana, and the Democratic Republic of the Congo, although these efforts remain on a smaller scale compared to initiatives in the Americas, Australia, and Europe.

The significance of lithium as a vital resource for battery production, particularly for electric vehicles, has seen sharp fluctuations in market prices. Over the last two years, Zimbabwe has emerged as a key player in the global lithium market, driven by heightened interest from Chinese mining companies. The sharp decline in lithium prices from late 2022 has prompted a reevaluation of investment strategies; however, the long-term potential of lithium as a resource continues to attract investment, particularly from firms aiming to ensure a steady supply for future production needs. The collaboration between Chinese corporations and local state-owned companies marks a strategic effort to harness Zimbabwe’s rich lithium reserves, positioning both the local economy and the companies for future growth amidst fluctuating market conditions.

In conclusion, the collaboration between Chinese mining companies and Zimbabwean entities in developing a lithium deposit underscores the strategic importance of lithium in the global market. Despite facing a significant drop in prices, the investment reflects a robust belief in the long-term viability of the lithium sector. The anticipated project at Sandawana promises substantial production capacity, thereby reinforcing Zimbabwe’s status as a pivotal player in the lithium economy. Chinese firms are not only focused on local opportunities but are also strategically positioning themselves to secure essential resources in the face of projected recoveries in lithium demand. As such, these developments may set the stage for a new era of growth within Zimbabwe’s mining sector and beyond.

Original Source: africa.businessinsider.com