Zimbabwean miner to close $310m lithium deal

From the newsletter

Kuvimba Mining House is set to close a $310 million deal with a consortium of British and Chinese companies this month for lithium mining at Sandawana Mines. The Zimbabwean government owns a 65% stake in the company. Zimbabwe is the largest producer of lithium in Africa, a metal key to electric mobility. 

• Lithium prices have fallen more than 80% from their November 2022 peak. This was caused by oversupply of the metal and slower-than-expected EV sales.

• However, huge demand forecasts for lithium, which will be driven by increased demand for EVs, has propelled the closure of the Sandawana Mines deal.

More details

• Kuvimba is a holding company for several mining firms namely; Freda Rebbaca Mine, Shamva Mining Company, Jena Mines, Homestake and Elvington. Others are Sandawana Mines, Bindura Nickel Corporation and Great Dyke Investments. 

• Sandawana Mines, which is owned by Kuvimba, produces emeralds, lithium, and other minerals. The investment by the consortium firms is part of the firm’s plan to make the mine to make it one of the world's largest lithium producers. 

• The consortium will pump money into the construction of a concentrator with a capacity to process 3 million metric tonnes of lithium per year at Sandawana Mines. The concentrator will initially produce 600,000 metric tonnes annually. 

• The value of the project has been estimated at between $2.5 billion and $3 billion once fully operational. The project will be operated by the consortium for six years before being transferred to the Zimbabwean government. 

• Zimbabwe has attracted more than $1 billion of investment in lithium projects since 2021. The investments are mostly from Chinese battery metal companies. Some of the Chinese firms that have already acquired lithium assets in Zimbabwe are Zhejiang Huayou Cobalt Sinomine Resource Group, Chengxin Lithium Group, Yahua Group and Canmax. 

Our take

• Zimbabwe’s possession of vast lithium deposits gives it a key role in the global transition to electric mobility. Demand for lithium will only grow as automakers ramp up production of EVs. Zimbabwe must therefore use its strong position to negotiate for favourable lithium mining deals with investors. 

• New investment will help Zimbabwe bolster its lithium processing capacity. The country has been losing revenue through export and smuggling of raw lithium. Efforts to prevent this, such as the ban on export of unprocessed lithium in December 2022, yielded mixed results. Zimbabwe should therefore lure fresh capital in lithium mining to maximise returns.