Business - Featured - Local - Mining - Top Stories - May 18, 2021

Zim’s virgin Lithium deposits to benefit economy

Zimbabwe’s virgin Lithium deposits if brought on full production will get a firm, lucrative opportunity on the global market with BYD, China having announced that they have gone all LFP (Lithium-iron-phosphate) in the manufacturing of electric car batteries.

Experts argue that Zimbabwe can potentially account for 20% of global lithium if all its known lithium resources are fully exploited.

BYD Co Ltd is a Chinese manufacturer of automobiles, battery powered vehicles, bused, forklifts, solar panels, rechargeable batteries with offices around the world including in Zimbabwe. It is also, the second largest EV brand by volume behind Tesla and it supplies carmakers with its battery technology. The company recently made an announcement that it has developed a new business model focused on LFP (Lithium-iron-phosphate) not only as a cheap mineral but for its safety versus those with high nickel and low cobalt content which carry a greater risk of fire.

Latest data from the Mining Index News as of 2019, ranked Zimbabwe is a top 10 of lithium producer globally with reserves of 23 000 tonnes, roughly 0,2 percent of the global reserves which is only a fraction of the worldwide total. The FY2019 reveals that Zimbabwe and Namibia were among the top 10 lithium producing countries globally after other countries like Australia, Chile, China and Argentina.

From the Zimbabwean 2021 National Budget, the government has showed its high ambitions for its mining industry, having announced its revenues to be tripling by 2023 and proposing to invest more in lithium processing plants. Lithium deposits in Zimbabwe include Bikita Mine, Arcadia Lithium Project, the Zulu project, the Lutope Lithium in Hwange, and Kamativi Mine. Some lithium deposits have also been identified in Mberengwa, Mutoko, Insiza, Matobo, Mazoe, Harare and Mutare butt research has shown that Bikita Minerals is currently the only lithium producer, believed to hold one of the world’s largest-known lithium deposits at over 11 million tonnes.

Zimbabwean economist Langton Mabhanga has argued that this new development by BYD is going to profit the nation more in terms of the country’s turnover and GDP. In the 2021 National Budget, Zimbabwe shows expectations for improvement in availability of power supply and foreign currency to propel production and capacity utilisation from current 61% to about 80%.

Tesla has been facing challenges with acquiring Nickel and Cobalt for the manufacturing process over years. Just a year ago, Tesla announced some Model 3s made in its Shanghai factory will be equipped with lithium iron phosphate (LFP) batteries made by China’s Contemporary Amperex Technology (CATL). These Model 3s captured 5.9% of the global full electric car market, according to data supplied by Adamas Intelligence thereby lifting  LFP’s overall share of the global battery market in terms of capacity to 18.5% in January. Adamas tracks demand for EVS by chemistry, cell supplier and capacity in over 90 countries.

The Observatory Economic Complexity (OEC) in its 2020 economic review shows that Zimbabwe’s Nickel Ore contributes a total amount of $229M. to the country’s turnover. In line with this, mining expert Phillip Chiwundura believes that the scratching of nickel for lithium batteries will not significantly affect Zimbabwe’s economy as stainless steel remains the major consumer of nickel produced in the world but the price of nickel might not increase.

“However, the price of the commodity might not increase as per analyst projections due to limited demand by EV manufacturers. The battery and EV provided an additional market for nickel with potential rapid growth and demand in the future. This market will not grow as expected given threats from substitute products such as Rare Earth Elements (REE). The news is good for lithium projects in Zimbabwe that are still on development phase as the demand of the product will increase following its use in EV,” he said.

Nickel producers have to manage their production levels in order to maintain demand since oversupply of the commodity might result in reduction in the price of the commodity on the market, Chiwundura says.

Zimbabwe’s mining experts therefore urges the government to support lithium projects as they will go a long way in reducing the time required to get them into production while focusing on reducing tax burden so that the mines can remain profitable.

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