Zimbabwe thinks big on lithium

Government has started working on plans to build lithium testing laboratories in Kwekwe, as the demand for the rare earth mineral skyrockets on global markets, making it a potential game changer for Zimbabwe’s mining industry and economy in general.

This comes as numerous investors are reportedly lining up to exploit the mineral in Zimbabwe.

Zimbabwe is the world’s fifth largest producer of lithium after Australia, Chile, Argentina and China.

The demand for battery-grade lithium compounds is expected to jump significantly in the next decade in response to the expected growth in demand for the electric vehicles.

Zimbabwe boasts vast deposits of lithium, but production still lags behind other global producers of the mineral, with only one company Bikita Resources currently producing.

Zimbabwe’s lithium production has averaged 1 000 tonnes a year since 2012, according to Statista, a reputable online statistics, market research and business intelligence portal.

Australia, the world’s largest producer extracted 18 700 tonnes of the commodity last year followed by Chile at 14 100 tonnes, Argentina at 5 500 tonnes and China at 3 000 tonnes.

The mineral also occurs widely in South America, but deposits are contaminated with magnesium.

Last week, the Government announced that State owned Zimbabwe Mining Development Corporation (ZMDC) will start processing dumps at Kamativi Mine in Matabeleland North Province before the start of actual production. The country is expected to generate revenue of $1,4 billion over eight years from the project, Mines and Mining Development Minister Winston Chitando told a mining indaba in South Africa this week.

He said ZMDC last Friday signed a deal with an as yet unnamed quoted company to process the dumps.

“Most of the enquiries have been about lithium,” Minister Chitando told reporters at the Mining Indaba in Cape Town, South Africa. “Zimbabwe will become a very significant producer of lithium.”

ZMDC had been working on reviving Kamativi Mine, which predominantly mined tin until its closure in 1994 owing to low prices on global markets and poor ore grades, but shifted its focus after geological studies revealed the mine had more lithium deposits than tin.

In Kamativi, lithium occurs in a massive outcrop estimated to hold 3,5 million tonnes.

Two more lithium mining projects, Zulu Project and the Arcadia Project are at different levels of development.

Prospect Resources Ltd, the Australian Stock Exchange firm recently raised A$10 million (about $8 million) to develop its Arcadia lithium mine through private placement.

Prospect is a Southern Africa focused lithium, gold mining and exploration company based in Perth. It has several gold assets, including the Sally, Bucks Reef and Prestwood mines located in the under explored Gwanda Greenstone Belt in the south west of Zimbabwe, as well as the Penhalonga project located along Mutare Greenstone Belt.

The lithium project, located on the outskirts of Harare, represents the Australian firms flagship project. Since acquiring the project in mid- 2016, Prospect has completed an aggressive drilling and evaluation programme that culminated in declaration of several Joint Ore Resource Committee (2012) Compliant Mineral Resource estimates.

Prospect now has over 14 square kilometre of granted mining claims over the Arcadia Pegmatite swarm that has an identified strike of 4,5km, making it the largest code compliant hard rock lithium deposit in Africa.

“The proceeds from the placement are expected to enable Prospect to accelerate the development of the Arcadia Lithium Project and take advantage of the support offered by the Zimbabwe’s new Government under its Rapid Response Initiative,” said the company.

Minister Chitando said lithium was one of the minerals that Zimbabwe would seek investment for.

Zimbabwe has already repealed empowerment regulations, which prohibited majority ownership of mines by foreigners for all minerals, except for platinum and diamond.

Analysts say Zimbabwe should take advantage of the positive sentiment ushered in by the new dispensation to attract investment into the mining sector to grow the economy.

“We are in the electronic technology era and lithium is a vital element in electronics,” chairman of University of Zimbabwe Geology Department Dr Tendai Njila. “With some little processing (of the mineral), Zimbabwe can benefit immensely.

Minerals and Marketing Corporation of Zimbabwe acting general manager Masimba Chandavengerwa said Zimbabwe will have “lucrative markets” for the commodity once production commences. Critics however said the expected demand for lithium may result in oversupply of the commodity on the market leading to inevitable price crash.

According to Grand View Research, Inc. the global lithium battery market size was valued at $22,8 billion in 2016 and is expected to expand to $93,1 billion by 2025, while growing at a compound average rate of 17 percent. It said the growing number of applications for lithium batteries in electric vehicles, portable consumer electronics and grid storage systems due to its high energy density, drives market demand.

The report specifies that the lithium cobalt oxide was the leading product segment and was valued at $7,15 billion in 2016. Cobalt is also a crucial component of the lithium battery market.

According to Morgan Stanley, 81 percent of 132 million new auto sales will be electric, according to Morgan Stanley. Tesla, the pioneer of the electric vehicle revolution, is turning to Chile to secure the lithium it needs to power its mass production drive.

Global producers of processed lithium are agreeing long-term contracts with their customers to fund the investments needed to address a looming shortfall, according to international media reports. Mining analyst however said while the scramble for lithium is undoubted and Zimbabwe should get its fair share, it would be interesting to know how much the new investors were paying and whether there would be expected to beneficiate the mineral given that the dumps also contain other minerals.

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