Chinese rush for Zimbabwe’s Lithium; what do locals stand to benefit?

By Fadzai Chimuriwo

Harare- UNDER the background of the active development of electric vehicles as well as electric energy across the world, lithium ore is fast becoming an indispensable raw material for the industry that desperately seeks it.

This surge in global demand for electric vehicles and batteries has ignited an even higher demand for minerals such as copper, lithium, graphite, and cobalt, which Africa has in abundance.

Zimbabwe holds Africa’s largest lithium reserves, the fifth-largest globally, with Masvingo Province boasting of the world’s largest-known deposit of the metal at around 11 million tonnes.

Zimbabwe’s wealth in the highly sought after natural resource has seen a spike in Chinese interest to dig out the metal.

A Chinese firm, Zhejiang Huayou Cobalt, recently purchased the Arcadia hard-rock lithium mine just outside Harare from Australia-listed Prospect Resources and other Zimbabwean minorities in a $422 million deal.

In June, China’s Sinomine Resource Group launched a $200 million project to build a plant and expand existing mining operations at Bikita lithium mine which was acquired for US$180 million back in January.

Speaking at the launch of the Sinmine project, President Emmerson Mnangagwa said the investment positions the country as a major player in the global battery minerals supply chain. He is absolutely right. This could be a game changer for Zimbabwe. The benefits can be numerous, provided the country gets a good deal from the Chinese investors. And this is exactly where the problem comes in.

If there is any credit that can be given to the Chinese, it is the fact that they are quite visionary, they see far ahead and are able to make profitable projection even before they commit to an investment.

Our African leaders, on the other hand, are usually short-sighted, with their planning tied to the political term of office.

Did Zimbabwe really conduct a market research to understand how the surge in Chinese interest to mine Lithium is going to benefit the country?
Does President Mnangagwa and his government really think the Chinese investors who are taking over the Lithium mines have Zimbabwe’s interest at heart?
No they don’t, and the sooner he realises this the better.

From the perspective of the market demand, there is no doubt that the lithium rush and the car batteries manufacturing in the energy auto industry is supposed to greatly contribute to economic development in Zimbabwe.

But this could not be the case. One of the reasons for this is that the government missed an opportunity to secure a significant stake in the mining investment. What is worse is that there is still no clear demand from the government to ensure that the Lithium that the Chinese will be mining in Zimbabwe should be processed within Zimbabwe. This would boost industrialisation in Zimbabwe and further create real job opportunities for the local people.
In the absence of that, the government is left to suckle on the droplets of mining taxes which (as the trend is with all other mining firms) are always subjected to under-declaration of profits.

It is understood why the sale of lithium mines to Chinese companies has seen a polarised public response, with many concerned that there will be few national or local benefits.
Archie Mathibela is right to point out that the sale highlights the need for greater regulation of foreign investors in the country to enforce business obligations and protect local interests.
The misgivings from Zimbabweans over the surge in Chinese mining of Lithium brings to light the broader socio-economic and political forces at play in the country’s natural resource deals.

Whereas Huayou and Sinomine’s acquisitions of mining sites can be seen as a beacon of progress for Zimbabwe’s economy and a catalyst for jobs and tax revenues, government will do well to expect exploitation of the highest degree from the Chinese investors.

Examples of the kind of reputation that the Chinese brings on board is all around Zimbabwe for those who have eyes to see.

Let’s celebrate the investments, but let’s also ensure that we get a win-win deal from the Chinese investors so that our natural resources do not only go to develop the Asian economic giant.