China dominates Zimbabwe's lithium sector

China has solidified its position as the dominant player in Zimbabwe's burgeoning lithium industry, a new report by the Zimbabwe Environmental Law Organisation (ZELO) reveals, raising alarms over environmental, labour, and governance risks linked to the sector's rapid expansion.

The ZELO study, Mine to Market for Critical Minerals: Zimbabwe's Lithium Supply and Value Chain Situational Report, highlights that Chinese companies now control the majority of major lithium mining and processing operations in the country. This dominance has been formalised through the establishment of the Chinese Lithium Producers Association, created to advance the collective interests of Chinese investors.

"Findings from mine visits, literature reviews and interviews showed that Chinese corporations overwhelmingly dominate Zimbabwe's lithium sector," ZELO said. "In 2023 alone, Chinese companies secured investment deals worth US$2.79 billion, underlining their expansive presence across the supply and value chain."

During a joint ZELO–Chamber of Mines meeting in Victoria Falls in 2024, the Association raised policy concerns affecting their operations, including the retrospective hike of the special capital gains tax from 5% to 20%, high operating costs, persistent power shortages, limited access to water for processing, and ongoing uncertainty over taxation and export regulations.

While Chinese investment has revitalised Zimbabwe's lithium industry, ZELO found widespread issues of poor labour standards and environmental violations, particularly among medium- and small-scale Chinese operators across lithium, gold, coal, and chrome sectors. Reported problems include non-compliance with Environmental Impact Assessment (EIA) regulations, dust pollution, water contamination from mine effluent, low wages, inadequate protective equipment, and allegations of worker abuse and discrimination.

The report warns that such malpractices have contributed to a perception that Chinese companies have a poor human rights and environmental record in Zimbabwe, posing reputational risks at a time when global supply chains increasingly prioritise strong Environmental, Social, and Governance (ESG) standards.

Although Australian and British companies are also present in the sector, ZELO noted that Chinese dominance creates an imbalance that weakens competition and limits Zimbabwe's bargaining power. "This imbalance restricts the country's ability to derive optimal value from its lithium resources," the report says. "It also exposes Zimbabwe to external risks linked to fluctuations in Chinese global investment or commodity demand."

Data from the Minerals Marketing Corporation of Zimbabwe (MMCZ) highlights a stark disparity between raw and refined lithium prices. A tonne of lithium concentrate with 4%–5.5% Li₂O content sells for US$300–US$600, while refined lithium hydroxide or lithium carbonate can fetch more than US$26,000 per tonne. ZELO argues that this gap underscores the urgent need for Zimbabwe to focus on domestic production of high-value refined lithium rather than exporting low-value concentrates.

To achieve this, ZELO recommends increased investment in beneficiation, production of industrial by-products such as sodium sulphate anhydrous and alumina silicate, stronger local content requirements to promote skills transfer and technology adoption, tighter enforcement of labour, safety, and environmental regulations, and strategic partnerships with non-Chinese investors to diversify markets.

With global demand for clean-energy technologies on the rise, ZELO concludes that Zimbabwe has a strategic opportunity to leverage its lithium reserves to drive industrialisation and green economic growth. "Developing integrated lithium value chains, from extraction and refining to manufacturing and recycling, will boost exports, create jobs, increase revenue, and position Zimbabwe as a regional hub for sustainable mineral-based development," the report states.