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Zimbabwe’s Lithium Rush: How China is Securing its Place in the EV Battery Market

How Chinese companies are investing billions of dollars in Zimbabwe’s lithium projects to secure a steady supply of the metal for EV batteries

by Motoni Olodun

Zimbabwe, a country rich in lithium resources, has become a hotspot for Chinese investments in the electric vehicle (EV) battery sector. Chinese companies have poured billions of dollars into acquiring and developing lithium projects in the Southern African nation, hoping to secure a steady supply of the metal that is essential for making EV batteries.

Lithium, also known as “white gold”, is a lightweight metal that can store a lot of energy. It is a key component of lithium-ion batteries, which power EVs and other clean energy technologies. As the global demand for EVs grows, driven by climate goals and consumer preferences, so does the need for lithium and other battery minerals.

According to the International Energy Agency, the global demand for lithium could increase nine-fold between 2022 and 2030, raising the risk of a supply crunch. China, the world’s largest producer and consumer of EV batteries, has limited lithium resources of its own and has been seeking to secure access to deposits overseas.

Zimbabwe, which has the largest lithium reserve in Africa and the sixth largest in the world, offers an attractive opportunity for Chinese investors. The country has an estimated 10 million metric tonnes of untapped lithium resources, which could potentially meet 20% of the world’s demand.

Zimbabwe also has a deregulated mining sector, cheap labor, and abundant solar power potential, which could lower the environmental and social costs of lithium extraction. Moreover, Zimbabwe has been isolated by the West and sanctioned for human rights violations, making it more receptive to Chinese investments, which are based on the principle of non-interference in domestic affairs.

In the past two years, Chinese companies have invested over $1.4 billion in acquiring lithium projects in Zimbabwe, and more money is on the way. Last year, Chinese companies were awarded licenses that could see $2.79 billion in investment flow into the country, mostly in the mining and energy sectors.

Some of the notable deals include:

  • The $422 million deal where Zhejiang Huayou, the world’s biggest producer of cobalt, acquired controlling rights to Zimbabwe’s Arcadia mine, which is expected to produce about 900,000 tonnes of raw lithium ore per year.
  • The joint venture agreement between Premier African Minerals and Li3 Resources to acquire a 50% interest in Premier’s lithium assets located in Mutare.
  • The acquisition of a 100% stake in African Metals Management Services and Southern African Metals and Minerals by Hong Kong’s Sinomine for $180 million, gave it access to the Bikita lithium mine, one of the country’s largest.
  • The potential acquisition of a Zimbabwean lithium mine by China Natural Resources, Feishang Group, and Top Pacific, is valued at approximately $1.75 billion.

These investments could turn Zimbabwe into a key player in the global lithium-ion battery supply chain, which is currently dominated by China. China’s battery manufacturing giants, such as BYD and CATL, could source some of their lithium from Zimbabwe, after buying stakes in the Chinese owners of the lithium mines.

Zimbabwe’s president, Emmerson Mnangagwa, has ambitious plans to turn the country into an upper-middle-income economy by 2030 and sees lithium mining as a catalyst for development. He also aspires to turn Zimbabwe into a battery manufacturing hub and has attracted interest from Chinese investors to provide financing.

However, Zimbabwe’s lithium boom also faces significant challenges, such as poor infrastructure, political instability, corruption, environmental degradation, and social unrest. The country has a history of failing to turn its mineral wealth, such as diamonds and gold, into revenues for development, due to regulatory gaps, human rights abuses, illegal trade, and alleged corruption.

A recent investigation by NGO Global Witness in Zimbabwe and other African countries found that there is a danger of history repeating itself with lithium mining, without rigorous screening for corruption and social and environmental harms. The report also warned that the benefits of lithium mining may not trickle down to the local communities, who face displacement, pollution, and exploitation.

For Zimbabwe to fully reap the benefits of the energy transition, it needs to improve its resource governance, ensure transparency and accountability, protect human rights and the environment, and foster inclusive and sustainable development. Otherwise, the lithium rush may end up as a curse rather than a blessing for the country and its people.

Source: Zawya


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