Zimbabwe has the largest lithium reserves and mines in Africa, and it ranks high globally among the leading lithium producing and supply countries after Chile, Australia, China, Argentina, and Brazil.
Recently, Chinese companies, local companies, and artisanal miners have been rushing for lithium resources, prompting the Zimbabwean government to respond with legislative changes and pronouncements.
Chinese Investment in Lithium Mining
Increased interest in Zimbabwe’s lithium has attracted an influx of prospective lithium mining investors, especially from China. To date, there are more than seven lithium exploration and mining projects at different development stages, with Chinese companies leading the race.
According to a recent ZELA report, Chinese-owned companies have acquired the biggest portfolio of lithium mining projects in Zimbabwe. Some notable Chinese acquisitions include:
- Arcadia Lithium Project acquired by Zhejiang Huayou Cobalt for US$ 422 million from Prospect Resources in 2021.
- Bikita Lithium Mine acquired by Sinomine Resource Group (SRG).
Besides acquisitions, Chinese investors Eagle Canyon International Group Holding Limited and Pacific Goal Investments have sealed a deal of US$13 billion with the Government for the construction of a ”mine to energy industrial park” to produce lithium-ion batteries.
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The "Look East" Policy
China’s aggressive approach in acquiring lithium mining projects matches Zimbabwe’s Look East Policy initiated by late President Mugabe, which entails preferential trade relations with Asian countries, including China.
With China’s growing mining, processing, refining and manufacturing capacity for energy minerals and EV batteries, Zimbabwe has become a major source market for raw materials alongside other Chinese lithium supply countries that include Chile, Argentina and Australia.
The Chinese strategy demonstrates no fear to seize the opportunities and occupying the risky investment space in Zimbabwe’s mining sector. Western investors on the other hand remain reluctant to work in Zimbabwe and are concerned about the human rights situation.
They fear sanctions, political uncertainty, security of investments and reputational risks. Besides Chinese companies, Australian investors still run the Step Aside Lithium Project.
Artisanal Mining and Its Challenges
Local communities and villagers in lithium-rich areas of Zimbabwe are participating in lithium mining and trading activities, attracted by quick money and forced by limited (formal) job opportunities in the country. This is despite the illegality of artisanal mining in Zimbabwe.
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By November 2022, reports indicated that an estimated 5,000 artisanal miners, fortune seekers, and foreigners were involved in mining and trading lithium at Sandawana Mine. Additionally, ZELA identified artisanal miners in Mutoko, Chiredzi, Goromonzi, Mberengwa, and parts of Buhera districts.
Artisanal miners use picks, hammers, and shovels to dig and break lithium ore and load it onto wheelbarrows and trucks for export by Chinese, South African, or Indian buyers.
Challenges associated with artisanal lithium mining include:
- Limited access to clean water
- Lack of ablution facilities
- Environmental degradation
- Lack of personal protective equipment for the miners
Artisanally mined lithium is being sold at a pittance to Chinese buyers with prices ranging between $100-$150 per tonne.
The artisanal sector is at present illegal and thus not regulated, yet the Government has been considering developing an Artisanal and Small-Scale Mining Policy.
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Experience in other minerals such as gold in Zimbabwe and other African countries (DRC and Tanzania) has shown that artisanal mining in resource-rich areas has great development potential and criminalising it is counterproductive. An effective framework should have the right balance between regulating and supporting miners to collectively improve responsible mining practices, working conditions, environmental impact, and payment of taxes.
Legislative Changes and the Export Ban
Sudden economic and financial policy changes and inconsistencies affect the confidence of companies to make quick investment decisions in the country.
Legal changes and reversals were evident when Government passed a law to ban the export of raw lithium through regulations. Statutory Instrument 213 of 2022 and SI5 of 2023 banned the export of unprocessed or unbeneficiated raw lithium ore and base minerals, except under the written permission of the Minister.
The ban on export of unprocessed base minerals has largely been viewed as part of efforts to promote value addition or beneficiation of minerals and to stop smuggling of raw lithium.
Zimbabwe might have taken a cue from other African countries and Latin American countries that imposed bans on raw lithium exports and forced mines to process and refine lithium into concentrates before exporting to retain value of mineral wealth, boost tax revenue and encourage new local businesses and add jobs.
However, Zimbabwe’s challenge is whether it will be able to attract adequate capital and investment for processing and refining lithium into finished products such as batteries.
Transparency, Accountability, and Responsible Sourcing
For Zimbabwe, transparency and accountability are important aspects that should be followed and applied in the lithium mining sector. In the same vein, encouraging companies to adopt responsible sourcing standards may help.
ZELA also recommends opening up the sector to other investors to curb the Chinese monopoly which does not bring competition and value to exploiting the resource wealth.
It is hoped that the Responsible Mining Audit instituted by Government in May 2023 will recommend company-level practices and even government-level legal and policy reforms that enhance responsible sourcing and mining standards.
Broader Economic Benefits of Chinese Investment
Over the past two decades, Chinese investment in Zimbabwe has reshaped key sectors of the economy, bringing tangible benefits to ordinary citizens. From infrastructure development and job creation to improved access to technology and healthcare, the impact is far-reaching.
Here are some examples of how Chinese investments have directly benefited ordinary Zimbabweans:
- Job Creation: Manhize Steel had 1400 workers as of May 2023 and the figure is expected to rise to 5000 as production goes full scale. It should also be noted that many Chinese companies have actively recruited women employees including unskilled workers.
- Affordable Goods: Through mass imports and local production, China has made goods more affordable for ordinary Zimbabweans.
- Agricultural Boost: Chinese investment in agriculture has boosted local food production. Additionally, Chinese machinery has improved irrigation schemes, allowing small-scale farmers to expand operations.
- Healthcare Access: Specialists with resident Chinese medical teams in the country pass on skills to local health practitioners and give specialised access to thousands of Zimbabweans.
- Enhanced Power Generation: Zimbabwe’s power generation capacity has been enhanced through Chinese-funded projects such as the Hwange Thermal Power Station’s Units 7 & 8 Expansion, which added 600 MW to the national grid. The Kariba South Extension project, completed with Chinese funding, has also contributed, to stabilising the electricity supply although output is affected by dam levels.
- Education and Skills Development: China has invested heavily in education and skills development, offering scholarships and training programs for Zimbabwean students.
- Entrepreneurial Opportunities: Many Zimbabwean entrepreneurs have benefited from Chinese partnerships in retail, hardware, and manufacturing. In the Mbare Musika and downtown Harare areas, local businesspeople source goods from Chinese traders at competitive prices, enabling them to maintain profitable businesses.
- Cultural Exchange: Additionally, cultural exchange programs have allowed Zimbabwean artists and performers to showcase their talent in China, opening up new international markets.
In Beitbridge, a border town in southern Zimbabwe, a mega industrial park that will eventually produce electricity, chromium-based materials and steel products is taking shape amid a major minerals rush in the southern African nation.
The US$3.6 billion plan to build Palm River Energy Metallurgical Industrial Park in the province of Matabeleland South is being led by one Chinese firm - Xinganglian (Shanxi) Holding Group, which aims to exploit abundant reserves of coal, iron ore, and chrome and position Zimbabwe as a major steel producer.
The project will cover 5,163 hectares (12,758 acres) within a special economic zone incorporating mining, power generation, coke production and steel manufacturing. It is expected to be built in five phases over 12 years.
Zimbabwe has become a key resource destination for China as companies continue to seal deals to establish mineral processing operations, including steel plants, at a time when such industries face decline in other countries, such as neighbouring South Africa.
The scope of the investments suggested that China had chosen Zimbabwe as its inaugural steel and chrome industrialisation zone in Africa.
China's Agricultural Investments in Zimbabwe
Power Generation Challenges and Opportunities
Zimbabwe is facing a chronic power shortage crisis, with frequent power outages lasting up to 17 hours a day in major cities, due to a lack of additional power generation capacity and aging power plants.
The country is highly dependent on petroleum and electricity imports, as it lacks hydrocarbon resources and has an inefficient electricity infrastructure.
Zimbabwe has a total installed power generation capacity of 2.3 GW largely owned by Zimbabwe Power Company (ZPC), with over 50% of electricity generated from hydropower.
Zimbabwe has set ambitious targets to increase power generation from cleaner energy sources and reduce greenhouse gas emissions in line with international commitments and its long-term development goals.
Chinese State-Owned Enterprises (SOEs) have been actively involved in Zimbabwe’s solar energy market, with several signed agreements totaling at least 350MW of solar energy capacities, although challenges remain in terms of financing and technical considerations such as the impacts of intermittent power on the country’s transmission system.
Zimbabwe’s mining sector, particularly in lithium production, has been a significant driver of the country’s economy, with ambitious goals of achieving $12 billion in revenue from mining activities in 2023.
The analysis highlights the contrast between a struggling power generation sector and a booming extractive sector, particularly lithium mining, in Zimbabwe.
Table: Chinese Investments in Zimbabwe - Key Projects
| Project | Investor | Investment Amount | Description |
|---|---|---|---|
| Arcadia Lithium Project | Zhejiang Huayou Cobalt | US$ 422 million | Acquisition of lithium mining project |
| Bikita Lithium Mine | Sinomine Resource Group (SRG) | N/A | Acquisition of lithium mine |
| Mine to Energy Industrial Park | Eagle Canyon International Group Holding Limited and Pacific Goal Investments | US$13 billion | Construction of a park to produce lithium-ion batteries |
| Palm River Energy Metallurgical Industrial Park | Xinganglian (Shanxi) Holding Group | US$3.6 billion | Construction of industrial park for steel and mineral processing |
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