FITCH Solutions believes Zimbabwe’s ban on raw lithium exports, steering towards in-country processing, is a strategy that holds immense promise for economic upliftment in the medium term.
The bold move was meant to harness the burgeoning global demand for electric vehicle batteries.
As a major lithium provider, Zimbabwe is poised to tap into the rapidly growing market for battery components essential to electric vehicles. The unexpected export prohibition, initiated last year, has galvanised international stakeholders to expedite their operational plans.
“Local refinement of battery-grade lithium could be a game-changer, potentially sparking job creation, bolstering state coffers, and accelerating economic expansion,” stated Jane Morley, Fitch Solutions’ Head of Sub-Saharan Africa Country Risk at Business Monitor International, in an interview with The Financial Gazette.
Platinum prices (USD/ounce) — Source: Google Finance
Yet, the success of this initiative hinges on the country’s capacity to process lithium and the capability of facilities like Zhejiang Huayou Cobalt to handle the demand.
Zimbabwe’s adoption of resource nationalism mirrors a broader trend where nations seek to capitalise on their mineral wealth by shielding local assets from foreign exploitation.
Morley warns, however, that the prohibition could backfire if Zimbabwe fails to realise its lithium export potential, which could negatively impact net exports and overall economic growth.
The mandate has compelled companies, predominantly Chinese firms, that have recently acquired stakes in Zimbabwean lithium mines, to undertake the costly and complex task of constructing local processing plants. This move, critics argue, exemplifies resource nationalism and could, if emulated by other nations, further inflate lithium prices on the global stage.
The government disclosed in 2020 that the nation was haemorrhaging over US$100 million monthly in mineral revenues. This staggering loss was attributed primarily to the clandestine smuggling of gold by small-scale miners.
President Emmerson Mnangagwa has voiced concerns over the influx of artisanal miners who, lured by the soaring global prices, have been scouring through deserted mines in search of lithium. This precious commodity is then illicitly channelled through bordering nations, ultimately reaching international markets.
“We will go nowhere with raw exports,” Mnangagwa declared, signalling a decisive shift in policy.
Echoing the president’s sentiment, a seasoned mining authority and CEO of Premier African Minerals, commended the government’s prohibition on unprocessed lithium exports. He emphasized the mineral’s potential to enrich the nation’s economy.
“We are unwavering in our commitment… to ensure that the nation, its treasury, and its citizens reap the benefits. As we progress, we envision a future where the processing of lithium-rich minerals is conducted within our borders,” Roach affirmed.
“This objective is paramount, and I am confident that the government, regulatory bodies, and investors will unite in our efforts to realize this ambition.”
The chief executive of the Chamber of Mines Zimbabwe, Isaac Kwesu, also praised the government’s initiative.
“We acknowledge the government’s renewed focus on lithium beneficiation, as encapsulated in the newly instituted SI 213 of 2022. This legislation seems to offer a degree of flexibility, allowing for the accommodation of exceptional circumstances within the lithium supply chain, particularly for newcomers or nascent projects that might seek ministerial consent for special export allowances,” Kwesu noted.
As the electric vehicle revolution unfolds, Zimbabwe stands on the cusp of reaping long-term benefits.
Projections by the International Energy Agency (IEA) suggest that by 2040, the demand for lithium could surge more than 40-fold, while the need for other critical minerals like graphite, cobalt, and nickel could see a 20 to 25-fold increase. This burgeoning demand positions Zimbabwe to become a pivotal player in the global transition to sustainable energy.
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