Small-scale miners plead for reprieve on lithium ban

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ZMF President Henrietta Rushwaya

By Talkmore Gandiwa

The Zimbabwe Miners Federation has lobbied the office of the President to delay the ban exportation of lithium by six months citing that it is affecting the operations of small scale lithium miners across the country.

The temporary moratorium will unlock foreign currency earnings to boost market liquidity and expand the Government’s revenue base through royalty fee payments and associated taxes.

Zimbabwe has banned all lithium exports after the government said it was losing 1.7 billion euros from exporting it as a raw mineral and not processing it into batteries in-country.

Lithium is so valuable as a component of electronic batteries – mostly for cars, mobile phones and computers – that it’s known as “white gold.” The price has gone up by 1,100 percent in the past two years alone.

In the letter addressed to President Emmerson Mnangagwa, ZMF President Henrietta Rushwaya said the ban has impacted negatively on the lives of small scale miners as they now fail to make a living since the ban was made to effect.

“Livelihoods of small-scale miners involved in mining base minerals have been negatively impacted by the ban since the trading of the minerals was halted,” said Rushawaya.

Adding on she said, some miners have found themselves stuck with huge stockpiles thus locking Cash Flows and affecting operations.

The government has banned the lithium exports under Statutory Instrument 5 of 2023 – Base Minerals Export Control, in particular, the export of raw lithium ore giving lithium companies an ultimatum of building lithium factories in the country rather than exporting it as raw.

 Establishment of Processing Plants takes between 6 months to 12 months to commission. The current market for lithium is outside Zimbabwe and companies need to export the mineral to raise capital to build the plants.

“The unexpected ban has prejudiced standing off-take agreements between miners and international buyers, some of whom had taken loans from their respective countries to finance trade in these minerals,” said Rushwaya.

Zimbabwe has the largest amount of the mineral in Africa and has enough of it to supply a fifth of the world’s needs, the government says.

Whilst it’s on track to become one of the world’s largest lithium exporters, the government says it should start its own battery industry rather than allow foreign companies to dominate battery production.

If it succeeds it will mark a sea change for Zimbabwe’s economy.

Like many other mineral-rich African states, it has allowed its raw minerals to be extracted by multinationals for decades without developing local industries that could process them, and create many jobs.

The Zimbabwean Ministry of Mines and Mining Development said it would also clamp down on the artisanal miners digging up lithium and smuggling the mineral across borders.

Mines minister Winston Chitando said, “No lithium bearing ores, or beneficiated lithium whatsoever, shall be exported from Zimbabwe to another country.”

The ban will “ensure that the vision of the president to see the country becoming an upper-middle income economy has been realized,” he added.

Those seeking to export raw lithium ore will need to provide proof of exceptional circumstances and receive written permission from the government before lithium can leave the country.

Additionally, new rules stipulate that a 5% royalty rate will be payable on lithium from January, and that this will have to be paid half in cash and half in processed final products (not ore). This is intended to allow Zimbabwe to build physical reserves of precious metals and minerals for the first time, while still receiving cash for the day-to-day running of government. The reserves may also be used to underpin government borrowing.

Lithium producing countries from Chile to Namibia have been working out how to maximise the benefits of their bounties. Among them is the world’s fifth-largest producer, Zimbabwe. If the country’s resources are fully exploited, its government insists, Zimbabwe can meet 20% of the world’s total lithium demand, heralding a gargantuan economic boom. Experts say that is a big if.

In December 2022, President Emmerson Mnangagwa’s government set out its stall with a strict ban on the export of unprocessed lithium, in a bid to stop artisanal miners from digging up the mineral and taking it across borders. The government plans to build domestic processing capacity and take advantage of surging global prices.

Companies that have made multi-billion dollar acquisitions in Zimbabwe will have to build lithium processing plants, an expensive and time-consuming exercise. Most are Chinese companies, which have bought a number of Zimbabwe’s lithium mines in recent years. Critics say the move represents resource nationalism which, if other countries follow suit, could push the price of lithium even higher.

Lithium, a critical mineral that will underpin the world’s green energy transition, has taken off in the past two years, with prices surging to record highs as supply has struggled to keep pace with unrestrained global demand.

According to Anglo-Australian mining giant Rio Tinto Group, half of all cars sold globally could be electric by 2030, way up from 9% in 2021. As a result, mining companies have been combing the world for opportunities to bring on new supplies, particularly companies based in China, a country which today controls the global lithium supply chain.

Lithium-producing countries from Chile to Namibia have been working out how to maximise the benefits of their bounties. Among them is the world’s fifth-largest producer, Zimbabwe. If the country’s resources are fully exploited, its government insists, Zimbabwe can meet 20% of the world’s total lithium demand, heralding a gargantuan economic boom. Experts say that is a big if.

In December, President Emmerson Mnangagwa’s government set out its stall with a strict ban on the export of unprocessed lithium, in a bid to stop artisanal miners from digging up the mineral and taking it across borders. The government plans to build domestic processing capacity and take advantage of surging global prices.

Companies that have made multi-billion dollar acquisitions in Zimbabwe will have to build lithium processing plants, an expensive and time-consuming exercise. Most are Chinese companies, which have bought a number of Zimbabwe’s lithium mines in recent years. Critics say the move represents resource nationalism which, if other countries follow suit, could push the price of lithium even higher.

As the world shifts towards clean energy, particularly in transportation, lithium has grown in importance. It is particularly important for the manufacture of high-energy-density rechargeable batteries. Battery makers expect lithium-ion batteries, which first arrived on the market in the early 1990s, to dominate the industry for decades to come. Lithium is also used in the production of electronics from mobile phones and laptops to washing machines.

In 2022, lithium prices soared more than 101.4% between January and March alone, according to Benchmark Mineral Intelligence’s Lithium Price Index. Lithium carbonate prices in China, the biggest electric vehicle (EV) market in the world, rose to a record $84,000 per tonne in November.

Zimbabwe, which has Africa’s largest lithium deposits, thinks it can do better from the price surge. Its Bikita mine, 300km south of the capital Harare, boasts 10.8m tonnes of lithium ore. And the Arcadia Lithium Mine is expected to reach an annual production of 2.5m tonnes, which could equate to $3bn in exports.

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