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Mnangagwa regime sees lithium as Zimbabwe's get-out-of-jail card

by Staff reporter
13 Mar 2023 at 07:50hrs | Views
High demand for minerals in lithium, driven by ion batteries for electric vehicles and other green technologies, may be Zimbabwe's sanctions get-out-of-jail card — or a get-rich-quick card for Zanu-PF.

Climate change is gifting Zimbabwe a mining bonanza via its large reserves of lithium, a coveted ingredient in electric vehicle (EV) batteries and other green and advanced technologies.

Zimbabwe's establishment clearly hopes surging international demand for lithium will bring a change in the political climate around the country, which remains negative.

Leaders hope its large reserves of strategic lithium – which they believe are the fifth or sixth largest in the world – will give the country bargaining power to overcome international isolation.

Some hope demand could even help overturn US sanctions, which are the toughest against Zimbabwe. Though almost entirely targeted at key officials of the ruling Zanu-PF party, they also oblige US administrations to veto any loans to Zimbabwe from the International Monetary Fund, World Bank and others.

President Emmerson Mnangagwa, who ousted Zimbabwe's founding president Robert Mugabe in a coup in 2017, has been more open to the West, touting for investment in the country's large mineral reserves.

Minister of Mines and Mining Development Winston Chitando said at the recent African Mining Indaba in Cape Town that his government saw mining as the key to solving economic problems, including low growth, unemployment and poverty.

"The mining sector plays a significant role in the economic development of the country … contributing more than 60% of export receipts and … 13% of GDP," he said.

Mining earned $5.4-billion in 2022, a 100% growth on the $2.7-billion of 2017.

Zimbabwe has about 60 minerals, but is largely counting on lithium as the global price of the ore skyrockets – up six-fold or 10-fold in recent years, depending on ore types – mainly because of exploding demand for lithium-ion batteries to power EVs.

A recent sharp price dip is expected to be temporary as the long-range forecast is of a huge deficit. Chitando said Zimbabwe was trying to maximise the lithium boom by banning the export of raw lithium, to encourage processing in the country.

Get-out-of-jail card

To entice investors, Zimbabwe is offering competitive tax rates and 100% repatriation of dividends and capital, and has dropped indigenisation requirements introduced by Mugabe – except for diamond mines.

Zimbabwe's ruling Zanu-PF evidently sees the country's strategic lithium as a get-out-of-jail card, bringing Zimbabwe in from the cold.

Mnangagwa was not invited to US President Joe Biden's Africa summit in Washington last December as he is still under personal sanctions. But the White House invited the Zimbabwean government, which was represented by its ambassador to the US. Harare saw that as a significant thaw in relations.

At the Mining Indaba, US officials laid out the strategic landscape for lithium and other vital minerals for green technologies. Under Secretary of State for Economic Growth, Energy and the Environment Jose Fernandez said global demand for minerals for EV batteries and other green tech far outstripped supply.

"By 2040, graphite demand will increase 25 times, and lithium 42 times," he said.

China's slice of the pie

What concerns the US – and partly drives Biden's re-­engagement with Africa – are inroads China has made into the continent, especially in critical minerals.

China makes about 70% of the world's EV batteries and is carving out a growing slice of the market in cobalt, another key battery ingredient, buying several mines in Democratic Republic of the Congo, which holds 70% of the world's cobalt reserves.

China processes about 80% of the world's cobalt. Amos Hochstein, Biden's energy adviser, told the Mining Indaba that any one country dominating the supply chain of a critical mineral presented a high risk.

Beijing aims for the same near-monopoly in lithium and already owns three of Zimbabwe's largest lithium mines.

In December, Mnangagwa banned raw lithium exports in pursuit of the old African dream of beneficiating, adding value by processing before export.

But sceptical Zimbabweans believe the lithium ban is a ruse to cut out artisanal miners and give opportunities to Zanu-PF cronies, especially in the military.

They see China as part of this insider enrichment and hear echoes of the Marange diamond fields, where Zanu-PF cronies and soldiers violently evicted miners in 2006.

A local weekly recently reported that state-owned Zimbabwe Defence Industries (ZDI) had been granted a special permit to export 100,000 tonnes of lithium ore a month to China.

Ibbo Mandaza, executive chairperson of the Southern African Political Economy Series Trust, a regional think tank, says: "Lithium is the new [mineral] curse for Zimbabwe, with similar implications to those experienced under the diamond saga. Whether this will have implications on the international relations front is open to speculation. However, what is certain is that the looting spree will gain momentum … and further entrench securocrats whose tenure in mining began in the 1990s with the DRC escapade."

Slow off the mark

This refers to Zimbabwe military officers exploiting DRC mineral resources when they went there in 1998 to prevent the toppling of President Laurent Kabila by rebels backed by Rwanda and Uganda.

Not all mining in Zimbabwe is corrupt, though, and some miners say China is simply buying up lithium stocks where it can as the US has been slow off the mark. Premier African Minerals CEO George Roach told The Africa Report that Western countries should lift sanctions against Zimbabwe to cash in on lithium.

His company owns Zimbabwe's Zulu lithium project. Roach told the journal that European companies wanting to buy lithium from the Zulu project "have a bit of rethinking to do". They should be pushing for an end to sanctions and looking for refining capacity.

"Sanctions versus Zimbabwe should be done away with," said Roach. "They don't have any place in a peaceful environment. Let's stop punishing people."

But J Peter Pham, a former US special envoy to the Great Lakes and a distinguished fellow at the Atlantic Council, doesn't see the US dropping sanctions soon.

"Lithium is not as rare as some people would like us to believe… It's pretty widely available around the world," said Pham, adding that a lot more mineral exploration was going on than before.

Known US reserves of about 9.1 million tonnes were 20 times what was being touted in Zimbabwe.

"Zimbabwe's lithium is not like the cobalt of the DRC, which owns some 70% of the world's reserves," Pham said.

He also saw little prospect of the US Congress repealing the 2001 Zimbabwe Democracy and Economic Recovery Act as it had been passed by 396 votes out of 435 and had been backed by powerful bipartisan sponsors, ranging from the far-right Republican Senator Jesse Helms to the liberal Democrat Senator Russ Feingold.

"And the sponsors included Senator Joe Biden," Pham noted.

Source - The Daily Maverick