In a recent development that has sent ripples through the global lithium market, Zimbabwe has emerged as a significant player in lithium production. This comes at a time when the lithium price has experienced an 80% decline in 2023, half of which occurred in the final quarter.
According to Morgan Stanley, the mined supply of lithium is projected to rise to 1.37 million tons this year, up from 1.02Mt in 2023. China and Zimbabwe are expected to contribute about half of this increase, with 114,000 tons and 62,000 tons respectively.
Despite the anticipated increase in demand, the supply is expected to outstrip it, leading to a surplus of 157,000 tons. This has led to speculation about potential mine production cuts to stabilize the market.
Zimbabwe’s rise in lithium production can be attributed to an investment of approximately $1bn by Chinese miners. In June, Prospect Lithium Zimbabwe, a subsidiary of Chinese company Zhejiang Huayou Cobalt, opened a new lithium mine with a capacity to process 4.5 million tons of hard rock lithium into concentrate for export per year.
Meanwhile, Australia’s largest pension fund, AustralianSuper, plans to double its exposure to local lithium stocks over the next five years. The fund sees “lots of opportunities” in nickel, cobalt, and graphite as key materials in the energy transition.
However, mine supply cuts might take time, according to Morgan Stanley. Only Australia’s Core Lithium, which began production and sales in February 2023, has suspended operations at its high-cost Finniss mine.
The lithium price is influenced by the growth in battery electric vehicles (BEVs), the trajectory of which there is some dispute. Morgan Stanley predicts that global BEV sales will grow 25% in 2024.
From a South African perspective, the emergence of a potentially stubborn supply surplus in lithium comes at an inconvenient time. Sibanye-Stillwater is building the €656m ($712m) Keliber lithium mine with first production expected from its 15,000 tons a year Kokkola lithium hydroxide refinery expected this year.
Despite the current challenges, the lithium sector and other critical minerals are likely to be “an attractive place to invest” over the next five years. This offers a glimmer of hope for investors and stakeholders in the lithium market.
Source: Miningmx
