Chinese investors to build battery metals processing plant in Zimbabwe

The Zimbabwean government has signed an agreement with two Chinese investors – Hong Kong Eagle International Investment Holding and Pacific Goal Investment – to construct a US$2.8bn battery metals processing facility, which is expected to be completed by the end of 2025.

The New Energy Special Economic Zone Industrial Park, to be situated 48km northwest of the capital Harare, will process metals used in the lithium-ion battery value chain. The project will include lithium-salt and nickel-sulphate plants, a nickel-chromium alloy smelter as well as two 300MW power stations. Lithium-ion batteries are used in electric vehicles and to store solar energy, among a host of other applications.

“The proposed mines to energy park will mark the inception of [a] lithium-ion battery value chain in Zimbabwe. It is set to place Zimbabwe amongst the world producers of lithium-ion batteries,” said President Emmerson Mnangagwa, according to the state-run The Herald newspaper. It is not clear from other reports that the venture will produce finished lithium-ion batteries.

The two Chinese entities will reportedly provide the funding and machinery, while the Zimbabwean government will contribute the land and minerals.

Zimbabwe’s lithium reserves, the largest in Africa, has attracted several foreign investors, particularly from China. In November 2021, Chengxin Lithium Group acquired a controlling interest in the Sabi Star lithium project in eastern Zimbabwe at a cost of US$76.5m. The following month, Australia’s Prospect Resources announced an agreement to sell its 87% interest in the Arcadia Lithium Project on the outskirts of Harare for approximately US$378m to China’s Zhejiang Huayou Cobalt, which plans to construct a processing plant with a capacity to treat around 4.5 million tonnes of ore and produce 400,000 tonnes of lithium concentrate per year. Prospect Resources is currently involved with exploration work at the Step Aside lithium project, just 8km north of Arcadia. In 2022, China-based Sinomine Resource Group acquired the Bikita Minerals lithium mine in the south for $180m and has since announced an investment of a further $200m to construct a plant and expand existing mining operations. Another player is London-listed Premier African Minerals, developer of the Zulu lithium mine, which plans to start exporting lithium-containing rock to China in 2023 after it secured an offtake agreement with Suzhou TA&A Ultra Clean Technology.

In 2019, the Zimbabwean government set a goal to grow the country’s mining revenues to US$12bn by 2023, more than four times the US$2.7bn it earned in 2017. Critics have frequently complained that Chinese mining investments are not bringing meaningful benefit to Zimbabweans. They also note that Zimbabwe has announced several ambitious mining-related projects in recent years that have failed to materialise. In response, President Mnangagwa announced in October the commencement of a new mining policy which forces gold, diamond, platinum, and lithium miners to pay half of their royalties in refined commodities and the other half in cash. The measure will assist the state to build mineral reserves and the commodities could also be used to securitise government borrowing.

 

References

‘Inclusive model key to mining’s US$12bn target’, The Herald, 15 September 2021

‘Chengxin Lithium drops after battery materials supplier plans to buy stake in mostly unexplored mining project’, Yicai Global, 04 November 2021

‘Binding agreements executed for sale of Arcadia Lithium Project to Zhejiang Huayou Cobalt’, Prospect Resources, 23 December 2021

‘Zimbabwe deals help China tighten African lithium grip’, African Business, 09 March 2022

‘What’s fuelling China’s lithium rush in Zimbabwe? The long game on zero carbon’, South China Morning Post, 13 June 2022

‘China's Sinomine invests $200 mln in Zimbabwe lithium project’, Reuters, 17 June 2022

‘China beats competition to secure Zimbabwe lithium source’, Deutsche Welle, 11 July 2022

‘Chinese investors plan $2.83 billion metals park in Zimbabwe’, Bloomberg, 16 September 2022

‘US$13bn mining deal sealed’, The Herald, 17 September 2022

‘Zimbabwe, Chinese investors sign $2.8B metals park deal’, VOA, 22 September 2022

‘Zimbabwe’s leader says new mining royalty rule starts this month’, Moneyweb, 09 October 2022