Zimbabwe is a mineral commodity-dependent nation. The Reserve Bank of Zimbabwe (RBZ) statistics show that in 2022, the nation generated a record US$11.6 billion in foreign currency receipts. Of this total, export proceeds contributed about 64% (US$7.4 billion) with minerals alone constituting 75.7% (US$5.6 billion) which is 11.8% higher than the 2021 mineral export value of US$5.01 billion.
Trend analysis of official trade statistics shows that gold has been Zimbabwe’s traditional top export revenue generator. However, there are other minerals like lithium also showing great prospects. With the government recently approving the national lithium ore policy, this week’s column, therefore, analyses the intentions of this new policy.
Global Lithium Developments
The global economies particularly advanced countries like the US and the European Union (EU) are witnessing a seismic shift from fossil fuel dependency toward electric vehicles (EVs) and clean energy technologies. The International Monetary Fund (IMF) projects that the globe must reduce its greenhouse gas emissions by at least 25% by 2030 in order to fulfill the goals set in the 2015 Paris Climate Agreement. This accord seeks to limit the increase in global temperatures to 1.5 degrees, for instance, through the reduction in world carbon dioxide emissions to net-zero by 2050.
As such, mineral commodities such as lithium are significantly benefiting from this shift to a green economy. With a high energy density, lithium is used in the production of rechargeable lithium-ion batteries which have become one of the main energy storage solutions in modern EVs. This has seen global demand for lithium skyrocketing, expected to reach approximately 2.5 million metric tonnes (MT) by 2030 up 756% from 2020 levels of about 292 000 MT. McKinsey predicts that because of surging demand for Li-ion batteries, “revenue along the entire value chain will increase 5-fold from about US$85 billion in 2022 to over US$400 billion in 2030”.
Zimbabwe Lithium Developments
With rising lithium demand, the base metal has great potential to significantly contribute to Zimbabwe’s economic growth and development. The nation holds Africa’s largest lithium reserves and the fifth-largest deposits globally. Currently, Zimbabwe is estimated to have the highest concentration of Africa’s lithium projects under exploration.
Some of these major projects include among others; Prospect Resources’ US$422 million deal with China’s Zhejiang Huayou in 2022 where the latter acquired controlling rights of Prospect’s Arcadia mine; Mauritius’ African Metals Management Services and Southern African Metals and Minerals with a combined 74% stake in Bikita Minerals were acquired by Sinomine’s Hong Kong unit; Premier African Minerals (PAM) which holds lithium claims at Fort Rixon entered into a joint venture agreement with Lithium Consolidated Mineral Exploration (Li3) to acquire a 50% interest in PAM’s lithium assets located in Mutare Greenstone Belt.
National Lithium Ore Policy
The rushed acquisition of local lithium mines by foreigners and the massive exportation of unprocessed lithium ores by artisanal miners has posed major obstacles to the development of the lithium sub-sector.
Cognizant of the foregoing, the government initially imposed a ban on the export of raw lithium in 2022 through statutory instrument 213 of 2022 (SI 2022-213). The SI 213 allowed exportation only for those with written exemptions from the Minister of Mines and Mining Development on condition that they are either exporting samples for assaying abroad or provides proof of exceptional circumstances allowing for exportation.
As a follow-up to the 2022 raw lithium export ban, authorities recently approved the Lithium Ore Policy (LOP). The LOP contains the following principles: Any individual or entity which owns a lithium concession can mine lithium ores for either processing at its own Approved Processing Plant (APP), or for sale to those with approved processing plants locally; Any individual and or entity wishing to process lithium ores will be required to construct an APP locally; Ore movement permits for lithium ores will only be issued where such ores are destined for a local APP;
Also, lithium ores can only be stored at the mining site where such ores were mined, or at a local APP; Any entity will require a Lithium Ore Purchase Licence to buy ores from miners. A local APP will be a condition of getting the Lithium Ore Purchase Licence; All players in the Lithium sector whether miners or holders of APP shall submit a summary of monthly reconciliations of Ore movements to the Ministry of Mines and Mining Development; and for any material to qualify as a concentrate for approval for export, it shall meet the minimum set technical specifications and the minimum selling price as set by the Minerals Marketing Corporation of Zimbabwe regularly.
Intentions of the New Policy
The Lithium Ore Policy (LOP) which seeks to prioritize local beneficiation and value addition of lithium is a step in the right direction as it is in sync with global dynamics. For instance, Chile, the world’s second-largest lithium supplier is set to nationalize its lithium industry to boost its economy and protect its environment. Also, Mexico has already nationalized its lithium deposits to maximize benefits from the “white gold”.
As such, Zimbabwe’s LOP has great potential to empower and transform the livelihoods of local artisanal miners in lithium-rich communities. Exports of value-added lithium and lithium products will help create jobs for locals and generate significant amounts of forex. Zimbabwe is in dire need of forex to accumulate reserves. These reserves are key in supporting the volatile ZWL, addressing the balance of payment imbalances, and use during natural disasters like El-Nino-induced droughts.
The latest LOP, therefore, intends to prepare Zimbabwe for the new green economy. The rising demand for green energy and low-carbon technologies is boosting lithium demand. As such, the lithium sub-sector needs to be well prepared to meet domestic demand.
An unprepared lithium sector will struggle to meet the rapid increase in future domestic demand thereby possibly slowing the integration of renewable energy technologies. If this happens, citizens particularly those living in areas prone to climate-change-induced disasters will continue to bear the brunt of climate impacts thus widening inequalities. So, it is high time that authorities pursue greening of economic policies to achieve climate justice.
Furthermore, the LOP intends to ensure supply chain security from the rising volatility of global geopolitics. The world has learned some lessons from the Russia-Ukraine war as well as the COVID-19 pandemic about the dangers of overreliance on imports. This has therefore changed the way countries should look at mining and mining projects. Cognizant of this, there is a great need for critical mineral strategies including the building up of domestic industry to avert shortages, economic crises, and the fragility of supply chains.
Generally, new technologies require an adapted workforce to operate increasingly complex machinery and perform data evaluation. Yet, finding and training locals to fill these roles can be a cumbersome task for the mining industry. Also, growing negative public perception and concerns around the future of mining, especially during bust cycles scare away potential mining workforce.
So, with climate change forcing nations to adopt green technologies, it is high time that authorities institute mining policies that entice foreign investors to commit to the development of the local industry by bringing their technologies and expertise. This will help build an interdisciplinary and technical local workforce.
Parthian shot
I believe that policy intention is not policy implementation. As such, authorities must strictly adhere to their lithium policy since previous episodes show that crafted policies such as the diamond, chrome, and black granite policies are inconsistently implemented. The government must also ensure that awarding lithium licenses is a transparent process and that license costs are affordable in order not to crowd out the poor majority.
More so, the government must ensure that big companies especially foreign-owned ones with approved processing plants (APPs) are purchasing lithium ores from local artisanal miners at competitive prices to avoid the overexploitation of indigenous people. Last but not least, authorities must devise additional policy sweeteners to lure foreign and domestic investors to strengthen the lithium value chain.
