Zimbabwe's ban on lithium exports raises fears over global prices

3 January 2023

Zimbabwe has banned the export of raw lithium to encourage investment in local processing facilities.

The African nation is the world’s sixth-largest producer and the largest lithium miner on the continent. Its decision to ban raw lithium exports aims to make it a bigger player in EV battery production and support its clean energy transition.

State-owned newspaper the Herald said the city of Harare lost US$1.8bn in mineral revenues due to unregulated artisanal mining, smuggling and “externalisation to South Africa and the United Arab Emirates”. It added the nation had the potential to supply up to a fifth of the world’s lithium needs.

Chris Berry, president of commodities advisory firm House Mountain Partners in New York, told the Herald Chinese firms that had made recent lithium investments in Zimbabwe would need to build processing facilities there at a cost of hundreds of millions of dollars so they can export higher value lithium chemicals.

“There is a great deal of capital required to build chemical conversion facilities outside of China, not to mention the two or three-year lead time necessary to actually complete construction and commissioning,” he said.

He added if more countries followed suit, it could have wider implications, such as higher prices for lithium and other raw materials.

Zimbabwe produced 1,200 tonnes of lithium in 2021, making it the sixth-largest miner globally behind Brazil (1,900 tonnes), Argentina (6,200 tonnes), China (14,000 tonnes), Chile (26,000 tonnes) and Australia (55,000 tonnes).

Sinomine Resource Group recently acquired what it claimed is the world’s largest-known lithium deposit in Zimbabwe, the Bikita mine, and has invested more then $200m into expanding it.

The British Geological Survey published a report in 2021 identifying multiple new potential lithium sources in Zimbabwe, which were either proven to be feasible for development or already in development. It warned however a challenging investment climate meant new developments were not progressing as rapidly as they could.

State media reported Chinese companies Zhejiang Huayou Cobalt, Sinomine Resource Group and Chengxin Lithium Group had acquired lithium projects worth a combined US$679m and begun progress on processing facilities, exempting them from the ban.

Archie Mathibela, a Zimbabwe-based communications consultant, wrote early last year the purchase of lithium projects in the country by Chinese companies raised concerns about business regulation.

“Electric vehicles are about to reach a tipping point in market penetration globally, and as a result investment in battery technology and production is rapidly rising,” Mathibela wrote. “Onerous legal requirements are placed on local companies to acquire certain mining concessions, which are skewed towards monopoly capital. 

“Legislative oversight and robust implementation in filling policy gaps are therefore critical… Environmental disasters and negligible financial benefits including through transfer pricing, and other licit and illicit financial leveraging instruments, remain a substantial risk.”

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