Chinese Mining Giants Collaborate with Zimbabwe on Lithium Development Project

Chinese mining giants Zhejiang Huayou Cobalt Co. and Tsingshan Holding Group Co. are collaborating with Zimbabwean firm Kuvimba Mining House to develop a lithium deposit in Zimbabwe, investing $250-300 million in a new mine and plant despite a severe drop in lithium prices. The project aims to produce 500,000 tons of lithium concentrate annually, and the companies remain optimistic about price recoveries in the future.

Chinese mining corporations, Zhejiang Huayou Cobalt Co. and Tsingshan Holding Group Co., are advancing the development of a lithium deposit in Zimbabwe in collaboration with a local state-owned enterprise. This initiative persists even amidst a notable reduction in lithium prices. Both companies have ongoing investments in lithium ventures within Zimbabwe and are currently engaged in a feasibility study for the establishment of a mine and processing plant at Sandawana, positioned in the southern region of the nation, as reported by Bloomberg. This partnership was ratified by the CEO of Kuvimba Mining House, which holds ownership over the asset and had previously disclosed the agreement in July without identifying the partners involved. Over the past two years, Zimbabwe has emerged as a significant contributor to the global lithium market, spurred by a price surge during 2021 and 2022 that has attracted considerable Chinese investments, keen to leverage the country’s substantial lithium resources. Although lithium spot prices have experienced a dramatic decline of almost 90% since late 2022 due to an upsurge in supply not aligning with the previously anticipated demand for electric vehicles (EVs), Chinese firms remain resolute in their pursuit of feedstock for domestic refineries. Huayou and Tsingshan intend to invest between $250 million to $300 million in the development of their lithium mining and processing infrastructure, projected to generate approximately 500,000 tons of lithium concentrate annually, according to Trevor Barnard, the acting CEO of Kuvimba. Mr. Barnard foresees an incremental rise in lithium prices over the upcoming year, predicting a robust recovery in 2026 and 2027 as the current production surplus transitions into deficits. Despite the prevailing low prices, Mr. Barnard expressed confidence in the financial viability of the project, stating that “Our economics show that we will still be a profitable business even at the current pricing levels.” Moreover, active lithium mining and exploration endeavors are proliferating across various regions of the continent, including Namibia, Mali, Ghana, and the Democratic Republic of the Congo (DRC). However, these projects remain relatively modest when compared to the scale of initiatives being developed in the Americas, Australia, and Europe.

The global lithium market has witnessed significant fluctuations over the last few years, influenced by rising demand for electric vehicles and expanding supply capacities. During 2021 and 2022, lithium prices surged, drawing international investment, particularly from Chinese firms seeking to secure lithium assets. However, a dramatic decline in lithium prices ensued in late 2022, driven by an excess in supply and diminished demand projections, prompting mining companies to reassess their strategies while still recognizing long-term prospects in the sector. Zimbabwe’s recent emergence as a key lithium player underscores the country’s potential role in meeting increasing global demands for lithium, further highlighted by recent partnerships and investments aimed at building a robust mining infrastructure.

In summary, despite a significant downturn in lithium prices, Chinese mining companies Zhejiang Huayou Cobalt Co. and Tsingshan Holding Group Co. are dedicated to developing a lithium mining project in Zimbabwe alongside Kuvimba Mining House. The project aims to construct a facility capable of producing substantial lithium concentrate, reflecting confidence in future price recoveries. This partnership epitomizes the continued interest and investment in Africa’s lithium resources, which possess the potential to play a crucial role in the global market going forward.

Original Source: www.newzimbabwe.com