INDEPTH: Race for Zimbabwe — electric vehicle (EV) battery hub of the future

INDEPTH: Race for Zimbabwe — electric vehicle (EV) battery hub of the future

By Business Insider

Amid the escalating global endeavours to confront the climate crisis, Zimbabwe is strategically positioning itself as a pivotal player in the global energy transition, fuelled by an unprecedented surge in demand for renewable energy technology.

With a rich history of lithium mining spanning six decades, Zimbabwe is swiftly emerging as a contender in the burgeoning race to meet the soaring demand for electric vehicle (EV) batteries. The government estimates that the Bikita Minerals, situated 300 kilometres south of the capital Harare, harbours approximately 65.43 million metric tonnes of lithium resources, underscoring the nation’s significance in the rapidly evolving landscape of sustainable energy.

As multinational corporations engage in fierce competition to secure crucial assets in battery metals, Zimbabwe has become a prime destination. Its status as a mining hub in the African mining industry, coupled with its robust lithium reserves — often referred to as “white gold” due to sustained EV demand — positions Zimbabwe as a key player in the quest for battery metals. Notably, the lithium-ion battery (LiB), a crucial component of EVs, can constitute between a third to half of the EV’s total cost.

Zimbabwe’s triple crown: Lithium rivals gold and platinum in export revenue

With the surging production of EVs and essential electronics crucial for achieving a zero-carbon emission energy transition, Zimbabwe is rapidly ascending global ranks.

The heightened demand for EVs, driving the global thirst for lithium, could designate the country as the EV Battery Hub of the Future. Boasting Africa’s largest lithium reserves and ranking sixth globally, Zimbabwe strategically places itself among leading lithium-producing countries like Chile, Australia, China, Argentina, and Brazil, underscoring its pivotal role in meeting the escalating demands of a progressively electrified and sustainable global economy.

In the first nine months of 2023, Business Insider reports Zimbabwe generated $209 million in income from lithium exports. Forecasts predict that lithium mining will contribute approximately $500 million to government revenue in 2023, making lithium Zimbabwe’s third-largest mineral export after gold and platinum group metals, which earned $2.46 billion and $2.27 billion, respectively, in 2022 — this reinforces

Zimbabwe’s growing influence in the global mining industry and solidifies its strategic standing as an EV battery hub.

As a power play unfolds within the country, companies from China, Australia, and the United States are aggressively pursuing vital assets in battery metals, with lithium taking center stage.

This strategic move is poised to amplify lithium production across the nation, aligning seamlessly with the prevailing trend. S&P Global Commodity Insights anticipates new investments will boost lithium raw material production on the continent by more than 24-fold between 2022 and 2027. Globally, analysts at McKinsey project a remarkable growth of over 30 percent annually in the entire lithium-ion battery chain, from mining to recycling, surpassing $400 billion by 2030.

China’s proactive stance in shaping EV Battery market through Zimbabwean lithium ventures

While Australian and U.S. companies race to secure mining assets in Zimbabwe and other African nations with abundant mineral deposits, Chinese companies lead the pack. In the third quarter of 2023 alone, licenses awarded to Chinese firms could funnel a staggering $2.79 billion into Zimbabwe, primarily in mining and energy. This substantial investment — a tenfold increase from the previous year — dwarfs that of its closest rival, the United Arab Emirates, showcasing China’s unmatched commitment to the region.

“In the dynamic landscape of electric vehicle (EV) batteries, Zimbabwe has captured considerable interest from prominent Chinese investors, who have outpaced their American and Australian counterparts in lithium ventures,” said ZhenHua Wang, the general manager of Bikita Minerals, which is engaged in lithium mining and processes 300,000 metric tonnes of spodumene concentrate and 480,000 tonnes of petalite per year, in a conversation with Business Insider.

“Africa’s significance in China’s strategic initiatives is undeniable, with the nation exerting substantial influence in terms of both quantity and capital commitment, particularly evident in Zimbabwe’s pivotal mining sector.

This strategic alignment establishes China as a frontrunner, surpassing global competitors and solidifying its dominant position in shaping the future trajectory of EV battery technology. This trend underscores China’s proactive role in securing a leading position in the rapidly evolving EV market, emphasizing the nation’s foresight and assertive approach in navigating the complexities of the global energy transition.”

Benedict Peters’ Bravura Holdings emerges as key player in Zimbabwe’s lithium mining surge

Chinese investors have spent over $1 billion to acquire mining sites in Zimbabwe over the past two years, with several Chinese-owned companies completing construction or upgrades of lithium processing plants. Notably, African billionaires are also making significant forays into the lithium mining sector.

Among them is Benedict Peters – an influential figure in the global energy sector, the owner of Aiteo Group, Nigeria’s largest indigenous oil producer, and arguably the largest private Black miner on the continent. Peters has strategically entered the scene through his vertically integrated mining company, Bravura Holdings Ltd., making discreet moves in Zimbabwe.

Bravura Holdings strategically pivots its operations following a significant acquisition in Selous. With an unwavering commitment to staying ahead in this ever-evolving industry, the company is now setting its sights on a substantial lithium deposit in Kamativi — reflecting the dynamic and adaptive landscape of the sector.

Bravura is also presently developing platinum, steel, copper, and gold assets in other countries across Africa, including Ghana, Nigeria, Democratic Republic of Congo, Namibia, Mozambique, Cote d’Ivoire, Sierra Leone, Guinea Bissau, and South Africa.

Amid Zimbabwe’s economic challenges, exacerbated by hyperinflation, forex shortages, and rampant unemployment, the influx of billions in investments is seen as a crucial step in the government’s efforts, led by President Emmerson Mnangagwa, to revitalize the nation.

The mining industry, highlighted as a key component, aims to position Zimbabwe as the world’s largest exporter of lithium, contributing to 20 percent of global demand once fully tapped.

Mining’s crucial role in Zimbabwe’s journey to an upper-middle-income economy by 2030

Zimbabwe has weathered over two decades of challenging economic conditions marked by hyperinflation, forex shortages, and widespread unemployment. Against this backdrop, the government under President Mnangagwa is eyeing a strategic shift within the mining sector as a linchpin for national revitalization, ultimately aiming to establish domestic EV battery plants.

With aspirations to elevate the nation to an upper-middle-income economy by 2030, President Mnangagwa has identified the mining industry as a pivotal driver of this vision. The Ministry of Mines and Mineral Development envisions Zimbabwe becoming the world’s leading exporter of lithium, aiming to supply 20 percent of the global demand once the nation’s lithium resources are fully tapped.

Marshall Comins, the publisher of Billionaires.Africa and a public strategy consultant who provides strategic advisory services to African business and political leaders to manage high-stakes issues and special situations, said: “President Mnangagwa’s decisive moves within the mining sector exemplify a commitment to steering Zimbabwe toward a robust economic future.”

Comins also applauds the government’s focus on establishing domestic EV battery plants as a masterstroke in the pursuit of national revitalization. In addition to this he issues a poignant call to action: “Countries like the United States, Canada, Australia, with huge mining assets, need to start taking notice and working harder to enter Zimbabwe.” This underscores the global significance of Zimbabwe’s burgeoning mining sector and challenges traditionally dominant players to reassess their strategies.

With a keen eye on the geopolitical landscape, Comins positions Zimbabwe as a prime arena for strategic partnerships, ushering in an era where a multitude of global players actively engage in and contribute to the nation’s economic revitalization.

He argues that this proactive involvement is imperative to offset the escalating Chinese influence in the sector, asserting, “It’s a means to counterbalance the growing Chinese influence over the sector there.”

Comins issues a compelling call to nations, urging them to strategically position themselves in Zimbabwe. This approach is not merely an economic opportunity but a strategic necessity, aimed at mitigating the risk of undue concentration of influence and fostering a more equitable and competitive global mining industry. He envisions a recalibration of the industry’s power dynamics, ensuring that diverse nations play an integral role in shaping Zimbabwe’s mining landscape.

Highlighting a prevailing trend, he also notes that local lithium claim holders are divesting their stakes due to capacity constraints, citing challenges in resource exploration and production. To overcome this obstacle, he advocates for imperative governmental intervention, asserting that a dedicated fund is essential to empower local lithium holders for exploration and production endeavours.

In Comins’ view, the government’s establishment of a fund is critical, stating, “Holders of lithium claims in Zimbabwe are selling them off because they do not have the capacity for exploration or to fund production, so the government needs to set up a fund for the local lithium holders to be able to do exploration.” This underscores the necessity for a robust financial framework to empower local stakeholders and propel Zimbabwe’s aspirations in lithium mining.

How Zimbabwe’s lithium industry is thriving post-base mineral export control act

As the government endeavours to fortify its economic foundations by capitalizing on the burgeoning prospects within the mining sector — a formidable industry valued at $12 billion, constituting 11 percent of the African nation’s gross domestic product — a pivotal legislative stride was taken in December 2022. The enactment of the Base Mineral Export Control Act marked a definitive measure, prohibiting the export of raw lithium.

Noteworthy, however, is the exemption accorded to entities currently engaged in the development of mines or processing plants in Zimbabwe, a category encompassing notable Chinese enterprises such as Sichuan Yahua Industrial Group, Zhejiang Huayou Cobalt, Sinomine Resource Group, and Chengxin Lithium Group. Cumulatively, these firms have injected a substantial $808 million into lithium projects in Zimbabwe.

Positioned as a strategic maneuver, the ban on unprocessed base mineral exports has emerged as a catalyst for heightened investments in the development of lithium assets within the nation.

Widely regarded as a calculated initiative to foster mineral value addition and curb the illicit trade of raw lithium, this regulatory action compels mines to engage in the processing and refinement of lithium into concentrates before exportation.

Such a measured approach not only safeguards the intrinsic value of the country’s mineral wealth but also serves to augment tax revenue, stimulate the emergence of new local enterprises, and engender employment opportunities.

Zimbabwe’s agricultural thrust and President Mnangagwa‘s vision in action

While President Mnangagwa-led administration advocates for a move up the value chain within the mining sector as a pivotal avenue for national revitalization, due attention is equally directed toward the agricultural landscape.

Mnangagwa’s vision encompasses a revival of Zimbabwe as the quintessential heart of agriculture in Africa — an ambition steadily materializing in the wake of the end of the late Robert Mugabe’s era. The agricultural industry, once dormant, is now experiencing a resurgence under Mnangagwa’s stewardship, reflecting a multifaceted approach to economic rejuvenation.

In a concerted effort to fortify its agricultural sector, Belarusian President Alexander Lukashenko, earlier this year, delivered an array of agricultural vehicles, tractors, and equipment to President Mnangagwa in Harare, Zimbabwe, as part of a $58-million farm mechanization initiative. This substantial agreement, the culmination of protracted negotiations spearheaded by President Mnangagwa, seeks to bolster Zimbabwe’s agricultural capabilities.

Additionally, a supplementary deal valued at $100 million was inked, encompassing the supply of diverse machinery and equipment from Belarus destined for Zimbabwe’s agriculture and timber industries.

“In addition to the country’s 2018 legalization of medical cannabis and more recent measures to bolster the industrial hemp market – these efforts demonstrate the proactive approach that Zimbabwe is taking to putting the country back on the global agricultural map,” Ziya Gaziyev, a Germany-based businessman and the founder of the vitamin producer Schaeffer Nutraceuticals, which is actively exploring sourcing and distribution opportunities in Southern Africa, told Business Insider.

“It’s absolutely imperative for these strategic agricultural policies to continue as Zimbabwe seeks to integrate more completely with international markets.”

As the current administration persists in elevating the agricultural landscape, there is notable progress in the country’s horticultural sector, which had endured the repercussions of violent land seizures two decades ago. Fuelled by increased investments, this sector now aspires to achieve $1 billion in exports by the year 2030.

Zimbabwe’s horticultural exports, which reached a zenith of $140 million in 1999, were significantly disrupted by the forceful acquisition of white-owned farms orchestrated by former President Robert Mugabe. These land seizures not only displaced farm owners but also triggered a cascade of challenges, including food shortages and a protracted economic crisis marked by a staggering 500 billion percent hyperinflation in 2008. Presently, Zimbabwe is reaping the rewards of a resurgent horticultural sector, generating $120 million annually from exports that encompass citrus, flowers, tea, avocados, blueberries, and macadamia nuts, as reported by the Horticultural Development Council.

“Mnangagwa’s multifaceted approach, emphasizing both mining and agriculture, signals a holistic vision for national revitalization,” Mfonobong Nsehe, partner for Africa at the public strategy firm Global Executive Outcomes Group and the former lead Africa wealth analyst at Forbes, told Business Insider.

“The recent infusion of $58 million in farm mechanization from Belarus, coupled with a $100 million deal for machinery, exemplifies a strategic commitment to agricultural resurgence. As Zimbabwe reclaims its agricultural prowess, the horticultural sector, once ravaged, is rebounding with increased investments, eyeing a remarkable $1 billion in exports by 2030. He applauds Mnangagwa’s dedication to steering the nation toward economic recovery and agricultural excellence, transcending the shadows of past challenges.”