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Why All Eyes Are On Zimbabwe’s Lithium Industry

Zimbabwe Poised to Become Major Lithium Exporter with Chinese Investment in Key Mines

  • Africa holds a large percentage of the world’s mineral reserves, including lithium which is a critical component of electric vehicle batteries
  • Zimbabwe has 11 million metric tons of lithium resources alone and is expected to become one of the world’s largest lithium exporters
  • Chinese companies have invested in the country’s most important and resource-rich lithium mines
  • Artisanal miners were affected by a Base Mineral Export Control Act that was passed in 2022, banning raw lithium exports
  • However, companies developing mines and processing plants are exempt from the ban, allowing them to capitalize on the rising demand for battery minerals.

US and China Compete for Influence in Risky Zimbabwe

  • The United States and China have both increased their trading with Africa
  • The Chinese have made major investments in Zimbabwe, leading to tension between them and the U.S.
  • Zimbabwe attempted to bring balance by engaging with U.S. President Joe Biden’s second U.S.-African Leaders Summit
  • Sanctions were implemented against Zimbabwe President Robert Mugabe in 2002 due to controversial land redistribution program
  • Western investors have been skeptical of investing in such a risk-laden environment
  • China has been consistent in its presence and commitment in Africa, leading to the nation taking over the majority of resource extraction from western companies
  • Zimbabweans are concerned about not knowing what concessions African countries are giving out to the Chinese
  • Transparency is necessary for national interest to be protected so that resources can be exploited properly.

Unlocking Zimbabwes Potential: The Challenge of Resource Extraction and Politics

  • Zimbabwe has extensive mineral resources
  • The challenge is to properly control their extraction and pricing in order to maximize potential
  • Forming a cartel with other countries can create power, but must be presented as cooperation rather than competition
  • Politics in Zimbabwe has historically been an issue, with colonial narratives still influencing perceptions of Africa
  • Corruption, nepotism, politicization and militarization of natural resources presents a major challenge to unlocking Zimbabwe’s potential.

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As the second largest continent, Africa is home to30% of the world's mineralreserves. It holds 40% of the world's gold and atleast 90% of its chromiumand platinum. It also has the largest reserves ofcobalt, platinum, uranium, anddiamonds. With the global demand for batteriesrising and the search for new sources ofenergy, the world is reliant on minerals fromAfrican countries.But, many African leaders are looking to reclaimcontrol of the continent's resources.We need to process our lithium and get value.Lithium is a critical component found in electricvehicle batteries and reserves have beendiscovered throughout the continent, withZimbabwe, Namibia, Ghana, DemocraticRepublic of the Congo and Mali all having notablesupplies.Most automakers have announced a transition toelectric, meaning the demand for batteries and theminerals in them is going to skyrocket.In 2021, the world mined 540,000 metric tons oflithium. By 2025, the demand is expected to triple to 1.5million metric tons,and by 2030, 3 million metric tons.Zimbabwe has been mining lithium for 60 years andthe government estimates that its Chinese ownedBikita mine, located 300km south of the capitalHarare, has about11 million metric tons of lithium resourcesalone.Mining in Zimbabwe is very politicized.It's very securitized and sometimes it'smilitarized.In Zimbabwe, there are more than 80 state-ownedChinese enterprises, which have amassed atotal of $10.4 billion in investments andcontracts in the country from2005 to 2020.Meanwhile, the U.S.has fallen behind and relations with the nation,have been shaky.I think they already taken Africa for granted forso long and I think now is thetime to say maybe it's time to wake up.In the future, African countries like Zimbabwewill play an important role in the mining ofbattery mineral resources.In 2020, Zimbabwe was a sixth largest producer oflithium, and the country is expectedto become one of the world's largest lithiumexporters.CNBC explores Zimbabwe's mining sector to findout why China has a stronghold on the countryand why it matters to the U.S.Whoever comes to invest in the country must betold that, number one,you have come to Zimbabwe.Respect the Zimbabwean people.The world is changing and we need to get there.With or without us, Africa will move forward.Africa has other options.Zimbabwe is rising step by step,brick by brick and stone upon stone.No one, no one can stop thatmovement.Zimbabwe is home to over 60 different minerals,including all five of the critical minerals neededto build electric vehicle batteries: lithium,cobalt, manganese, nickel andgraphite. Minerals play an important role in theeconomic growth of Zimbabwe, accountingfor 60% of the country's total exports, with themining sector contributing to11% of the national GDP.In 2023, it's expected to grow by 6% and is valuedat 12billion U.S. dollars.Mining has played a critical role in terms ofsustaining growth in the economy and we've seen alot of investments within the mining sector overthe pastfew years. For us to realize the full potentialfrom the mining sector, it means we have to moveup the value chain.Zimbabwe primarily mines gold, platinum anddiamonds, but lithium prices haveskyrocketed. The price in May of 2022 was seventimes higher than the price at thestart of 2021.Zimbabwe is looking to capitalize off thisincrease and the country could potentially meet20% of the world's demand for lithium once itfully exploits its known resources.Lithium has been discovered in many parts of thecountry,close to the surface.The villagers have been mining that lithium andselling tomerchants, and that helps in alleviating ruralpoverty.Chinese companies Huayou Cobalt and SinomineResource Group, owned both the country's mostimportant and resource rich lithium mines.When we invest in the Chinese and allow them tocome and do what Zimbabweans are capableof doing, we are building China, not Zimbabwe.Zimbabweans are saying leave room for theZimbabwean people where the Zimbabweans areable to mine and invest in the local economy.CNBC reached out to the Chinese embassy inZimbabwe, which declined to comment on thestatement.The strategy of most of the new investors in thelithium miningindustry is to go towards mining solid battery-gradelithium. I don't think the Chinese compete withartisanal andsmall-scale miners.The Chinese have served as a middleman.Artisanal miners were doing the mining and thenthey would sell to the Chinesemining companies.So, there was some kind of a relationship, aworking relationship.Artisanal mining or small scale mining plays acritical role in the livelihood of over 1 millionZimbabweans. It's a largely informal method ofmining, where individuals use basic toolsto extract minerals.It's estimated that the government has lostnearly $2 billion in minerals smuggled across theborder through artisanal mining leakages.We cannot, as a country continue to be exportingprimaryproducts, including concentrates and ores.In December 2022, the country passed a BaseMineral Export Control Act, which bannedthe export of raw lithium.However, companies that are developing mines andprocessing plants in Zimbabwe are exempt from thisban. This includes Chinese firms Huayou Cobalt,Sinomine Resource Group, andChengxin Lithium Group, which have invested $678million intolithium projects.Any government in the world was bound to reactwhen your resources are justflying in all directions.However, the lithium concentrate is still beingexportedlawfully out of the country.So I think governments simply wanted to controlthelithium that was being extracted by artisanalminers, whichwas not being accounted for, and it was beingsmuggled out of the country.Artisanal miners were the worst affected by theban because they hadalready accumulated loads of raw lithium thatthey were preparing to sell and theycouldn't sell their lithium.They suffered more than any other person.With the new act passed.Zimbabwe is looking to capitalize off this pricesurge, signaling to the world that it's open forbusiness, but only if it benefits the country.There are two narratives: the political narrativethat mining isthe savior of the economy, and then thegrassrootsnarrative, which says mining is undermining ourlivelihoods.And we sit in between.We want to see mining contribute to the economy,but not at theexpense of the Zimbabwean people.And we say we are friend to all andenemy to none.In 2009, China overtook the Africa's largest trading partner.Growing from $121 million of traded goods in 1950to $10.5billion in 2000 and now $254 billion in 2021. Compared to the U.S., which sat at $64 billion2021.China now accounts for over 70% of global EVbattery production capacity andwith over 20 years of consistent commitment toAfrican nations, it has placed itself in the rightposition to access the resources needed tocontinue this trend, leaving the play catch up. In December of 2022, U.S.President Joe Biden welcomed 49 African leaders toWashington, D.C.for the country's second U.S.-African LeadersSummit and its first since the Obamaadministration.The United States is all in on Africa's future.This summit was a critical step needed tore-establish U.S.-African relations, which wererocky in the previous administration.It took eight years to hold this summit.This came as a reset in relationship between theUnited Statesand African countries.It also was an important moment for the signal to Africans that they take Africaseriously.Zimbabwe will use the meeting to reengage theUnited States ofAmerica. We hope the U.S.A.will be forthcoming.However, noticeably missing from the summit wasZimbabwe's President Emmerson Mnangagwa,who was not invited and has been under sanctions brought on by allegations ofcorruption and human rights abuses since2002. In his place, Foreign Affairs MinisterFrederick Shava attended.That itself, the fact that he came is also still asignal that the U.S. is interested in keeping the door open withZimbabwe.While the U.S. pledged its commitment to Africa,the reality is tensions have been building for along time.The U.S. has been under pressure from the AfricanUnion and the Southern African DevelopmentCommunity to lift sanctions against Zimbabwe.These sanctions were enacted after then ZimbabwePresident Robert Mugabe launched acontroversial program in 2000 that redistributedland from Zimbabwe's white minoritypopulation to its indigenous black population.The U.S. came to the summit with a trust deficit.America has not been consistent in the way thatit engages with Africa.The problem is America tends to go throughEuropean former colonialpowers to engage Africa.That is problematic because these countries aresovereign, independent countries.Following the sanctions, many Western governmentspulled aid and companies like Anglo American,which owns Zim Alloys, one of the country'slargest producers of chrome, sold its stake,leaving room for outside investors.Plus, the country still faces hurdles when itcomes to doing business.Zimbabwe currently has the world's highestinflation rate, peaking at 283% in2022 and lending rates can be as high as 45%.Western investors have been a bit more skepticalwhen it comes to investing inan environment like Zimbabwe, where there are alot of risks.But of course, the Chinese have decided to takethe risksand put in resources.The dominant players in the mining industry priorto the 2000 have been theWestern companies. When sanctions were imposed onZimbabwe by the U.S.And EU, Zimbabwe decided to change its foreignpolicy and come upwith what it called the Look East policy.Western companies were pulling out.Russian and Chinese companies found a way to getin, especially in theextraction of strategic minerals.The Chinese have a long standing history withZimbabwe and were one of the first countries torecognize Zimbabwe diplomatically when it gainedindependence in 1980.The Chinese have played for keeps.They showed up in Africa in the 50s during theindependence movement and stuck withthose countries, regardless of where the countrystands on the political spectrum.The United States, our relationship is not alwayspermanent, and the Chinese are just consistent inthat way. If you leave and you try come back tenyears later where that voidthat you left will be filled by somebody else.So it's, it's important that we be consistent.And many of Zimbabwe's mines are Chinese owned,including the Bikita mine, which is the largestlithium mine in the country, and the Arcadiamine, which is considered to be one of the world'sbiggest hard rock lithium resources.Zimbabweans are capable of mining lithium thatis close to the surface.They can do that.But the Chinese have been competing with theZimbabweans, evenin areas where Zimbabwe's can do it.The same happened with diamond mining.Zimbabweans discovered the diamonds, they startedmining.The government sent in the military and theybrought in the Chinese.So there is this feeling among Zimbabweans, thatthe government ispreferring the Chinese over its own citizens.Chinese investments are pouring into Zimbabwe.In 2022 Chinese mining companies Tsingshan, China Nonferrous, andHuayou Cobalt invested nearly $1.5 billion intoZimbabwe.In the same year, Sinomine Resource Groupannounced its plan to expand its currentproduction at the Bikita Minerals mine byinvesting $200 million into building a newlithium plant.Some of the Chinese companies that are mining inZimbabwe.They are buying companies that already exist thatwere owned by, say, Australiancompanies or American companies, and they aretaking over from theseold mining companies.While the government is signing deals with Chineseinvestors.Zimbabweans aren't naive to the issues that comewith accepting Chinese money.The negotiations of the contracts are done insecret.Often the national interest is lost in thatsecretnegotiation. The first thing we need to do is tobe transparent.We don't know the kind of concessions that Africancountries areactually giving out to the Chinese.I think there's been a lot of opacity aroundChinese investments on the African continent.It's clear that the resources belong to Zimbabwe,not the West nor the East.But how can Zimbabwe exploit its full potential?Maguwu proposes an OPEC-like cartel wheremineral-rich countries band together toregulate the price and extraction of mineralssuch as lithium.Zimbabwe produces minerals.We need to control the prices of our minerals.We need to control the marketing of our minerals.We also need to engage other countries, evenforming cartels.We need to identify which other countries producelithium in the world.Let's form a cartel so that we can control theglobalprices of lithium.The idea itself is not far fetched.It all depends on how it's structured and whocomes into thatcircle. If the DRC, Zambia, Chile, Indonesia, theUnitedStates, Peru, and Canada were to form a cartel,it gives them power,right? The power of start talking in one voice.With this developed nations that have clout onthe international stage.If, however it presented as us versus them typeof thing, then it can createa lot of animosity, so to speak, between theGreat North, and therich, and the poor, and so on.One of Zimbabwe's biggest challenges to reachingits full potential seemed to be its politics andthe narratives that surround it.The narrative on Africa is still a narrative thatdates from the 15th century.So that lens then through which you look atAfrica, is murky.You don't see value.You don't see return for your money.You see all the risks, but not the upside thatneeds to be changed.So since colonial times, mining has always playeda significant role in Zimbabwe'seconomy. Zimbabwe has not been able to leveragethe kind of mineralresources that it has.I know in terms of when people talk about mineralriches in Africa, they talk about SouthAfrica, Ghana and DRC, but Zimbabwe has loads ofminerals.There is massive potential for the country toreally generatehundreds of billions from its remaining mineralendowment.The elephant in the living room is corruption, nepotism, politicization,securitization, and militarization of our naturalresources.But I think if the government appoints the rightpeopleinto the right positions and creates theconduciveenvironment for professionalism to thrive in thesector,I'm very certain that Zimbabwe has the capacitytomaximize the potential from its minerals.