• ZIMBABWE

Elite sets itself for lithium boom

The government has banned exports of the mineral and set up its own lucrative deal via a military-linked company to sell to China

With global demand for lithium soaring – prices went up more than 100% in 2022 and are expected to keep rising – Zimbabwe could be poised for a bonanza. The country's lithium reserves are said to be the biggest in Africa, but early deals with China and the threat of corruption are raising fears that only those linked to the ruling Zimbabwe African National Union – Patriotic Front (ZANU-PF) government and the security establishment will benefit, as in past mining booms.

In December, the government forbade the export of raw lithium without its permission. The mines minister has the power to provide special exemptions in the case of 'exceptional circumstances', but the definition of what might qualify is vague.

President Emmerson Mnangagwa is well aware of the vast potential for lithium exports and wrote in the Sunday Mail newspaper that he issued the export ban after officiating at the ground-breaking ceremony of the Sabi Star Mine in south-eastern Buhera. He realised, he said, 'raw lithium would be carted out of the country with impunity… thus robbing us and future generations of this finite resource.' But the evidence indicates future generations are unlikely to benefit.

The state-owned Zimbabwe Defence Industries (ZDI) has been granted a special permit to export up to 100,000 tonnes of lithium ore per month to China, according to documents brought to light by the Zimbabwe Independent newspaper. ZDI has been under sanctions by the US government since 2005, and EU sanctions were renewed last year.

This is not ZDI's first foray into mineral exploitation. Previously, it was reported to own 40% of Anjin, a company mining diamonds in the eastern district of Marange in the 2000s, through two shadowy companies, Matt Bronze and Glass Finish (AC Vol 55 No 10, Mugabe moves on Marange). The diamond mines provided under-taxed wealth to senior elites within the security services, thereby securing their loyalty to President Robert Mugabe when he needed their help in effectively reversing his loss of the 2008 presidential election. Possibly hundreds of millions of dollars' worth of diamonds were traded outside official channels (AC Vol 58 No 21, Mystery of the missing mine profits). 

The diamond income also provided what anti-corruption lobbyists Global Witness calls a 'lucrative source of off-budget financing' for the security services, which was almost certainly used to finance election campaigns, violent responses to election losses and other covert operations. The granting of a special dispensation to ZDI to exclusively export a newly lucrative mineral at the beginning of a contentious election year has set alarm bells ringing (AC Vol 64 No 5, Electoral commission row raises fresh doubts about poll). 

Last year, Chinese companies Zhejiang Huayou Cobalt, the Sinomine Resource Group and Chengxin Lithium Group invested a combined US$678 million in lithium projects in Zimbabwe. China is reckoned to have around 60% of global energy minerals processing capacity and 79% of all electric vehicle (EV) battery-manufacturing capacity, but only around 8% of the world's lithium supply. It needs to secure more global supply. 

Premier African Minerals has also signed an agreement with Suzhou TA&A Ultra-Clean Technology to export spodumene concentrate (a lithium ore) to China. Chinese investors Eagle Canyon International Group and Pacific Goal Investment are reported to have signed a contract to develop plant that could produce around $8 billion worth of lithium a year in Zimbabwe. 

Details are hazy, however, and it would not be the first time that the government has announced a 'mega-deal' that didn't come to fruition (AC Vol 64 No 4, A bridge 100 metres too far). Prospects for Zimbabwe adding value to its lithium ore and other 'green economy' minerals seem slim. Huayou Cobalt, which spent $422m acquiring the Arcadia Lithium Mine in Goromonzi and will invest $300m in building a plant for the first stage of processing lithium, has ruled out producing battery-grade lithium in Zimbabwe as impractical and uneconomic. 

African countries often aim to add value to the natural resources before export; last year, Namibia's mines minister Tom Alweendo said all lithium had to be processed in the country before export, but whether or not this measure will succeed is unknown (AC Vol 63 No 25, Lithium scramble offers temptation). Zimbabwe has not yet set limits on lithium exports. From 40,000 tonnes this year, the commodities firm Trafigura estimates, Africa will produce 497,000 tonnes in 2030, the bulk of it from Zimbabwe.

Scramble

While officials in Harare scramble to regulate lithium mining, artisanal miners are already digging, with all the disastrous implications for health and safety typical of this method of extraction. 

Artisanal miners in Mberengwa and Bikita say their lithium is purchased by Chinese and Indian buyers, who truck the ore to South Africa, evading customs. They are commonly offered around $125 per tonne, less than half the price they might expect in Harare. 

The police are reported to be cracking down on small-scale exporters, and setting up roadblocks around the mines, but the trucks still get through by avoiding the controls or by bribing officers.  

The artisanal miners' numbers are inflated by the desperate unemployment situation, despite violent confrontations with security forces. At Sandawana Mine, in the southern district of Mberengwa, about 5,000 miners collect ore. 

In November, the police ordered them to clear the area. When Henrietta Rushwaya, president of the Zimbabwe Miners' Federation (ZMF), which claims to represent artisanal miners, visited the area in December, miners threw stones and she had to flee. The police retaliated with water cannon. Later in December, police clashed with miners and arrested an estimated 2,000 people, most of whom were later released without charge.

Rushwaya, a niece of President Mnangagwa, was caught smuggling six kilogrammes of gold to Dubai in her hand baggage in 2020, it was widely reported at the time. 

She has cut a deal with the new owners of Sandawana, Kuvimba Mining House, whereby only her ZMF artisanal miners will be authorised to collect and sell lithium ore in the area. Civil society groups that have supported artisanal mining communities during the diamond rush and the battles over gold-mining are concerned that the potential for violence is high. The politicised militias that controlled the extraction and sale of artisanal gold over the past decade could easily try to take over the lithium zones too.  

The government declared that Sandawana Mine was owned by Kuvimba Mining House in December 2020. Kuvimba's governance structure is opaque, but it appears that 65% is owned by the state and 35% by private investors. The state shares are held by a number of parastatals and government companies, among them Datvest Nominees, an asset management division of the Commercial Bank of Zimbabwe (CBZ), which is allegedly owned by the economic kingpin of Zimbabwe's dodgy deals, Kudakwashe Tagwirei (AC Vol 63 No 7, Sanctioned mogul adds steel to portfolio). Earlier in 2020, Sandawana was purchased by Landela Investments, one of Tagwirei's main investment companies, which went on a mining company acquisition spree two years ago (AC Vol 62 No 3, Tagwirei's hold on gold).

Like all Zimbabwe's other mineral resources, Harare's political pundits and mining experts agree, any lithium boom the country experiences is only likely to profit ZANU-PF high-ups, and remain largely within the informal economy, with no trickle-down effect and limited benefit to the national treasury through taxation.

Copyright © Africa Confidential 2024
https://www.africa-confidential.com:1070