Lithium in Zimbabwe: Expanding Downstream Along the Value Chain

Critical minerals present a once-in-a-lifetime opportunity for Africa to leverage the rising demand for clean energy for economic development. With sub-Saharan Africa alone holding approximately 30% of the world’s critical minerals, minerals mining in Africa presents a US$1.6 trillion opportunity to foster its transition into higher levels of economic development.

Zimbabwe's opportunity lies in its ability to capitalize on its lithium resources. Zimbabwe holds the world’s 7th largest reserves of unprocessed lithium, and has already introduced policies to limit exports of unprocessed lithium resources in efforts to develop their own battery industry. The government estimated that they were losing 1.7 billion euros by exporting the unprocessed form of lithium instead of lithium-ion batteries. In fact, since the ban in December 2022, the country has already reaped benefits financially as it tripled its 2022 lithium income by September of 2023. Moving forward, there could be a great opportunity for growth in industrial infrastructure, technical capabilities, and overall economy. 

The table below shows the processes throughout a typical lithium battery supply chain, along with the global market opportunities for each link. The opportunities provide context on the areas where Zimbabwe can expand their capabilities.

Opportunities across the lithium value chain

Source: Visual Capitalist, EnergyX

The largest opportunities globally include active materials and battery packs, which are projected to be worth up to US$231 billion combined by 2030.

Previously, Zimbabwe only played in the first link in the lithium battery value chain: Critical Element Production. That means that they could be capitalizing on almost 80% of the potential market value if the country were to play in all aspects of the value chain. While downstream vertical integration opportunities are available, it will take political will, institutional structure, investments, and technical capabilities to break through the high barriers of entry in activities along the chain. 

Market Opportunity 

Lithium-Ion Battery Market Growth 

Zimbabwe’s lithium opportunity is largely attributed to the maturity of the Electric Vehicle (EV) market, and its growing adoption rates. Statista Market Insights projects EV sales to grow by a Cumulative Annual Growth Rate (CAGR) of 6.63% from 2024 to 2029 to reach almost 19 million units sold in the latter year. The EV market is projected to grow from $67 billion in 2024 to $257 billion in 2030. EVs make up the greatest demand for lithium, as it is the crucial metal for lithium-ion batteries. 

Another market that demands lithium-ion batteries is the electronics market. This area also shows promising growth going forward, as the lithium-ion battery market for consumer electronics is projected to grow by a CAGR of 14.5% between 2022 and 2032. Through this time, the market will more than triple and present a US$18.8 billion opportunity for lithium producers and refiners. 

Mineral Resource Share

In 2023, Zimbabwe held 310,000 MT of proven lithium reserves which is up from 220,000 MT of proven reserves in 2021. While the current reserves only account for 1.2% of global reserves, investments in mineral exploration will undoubtedly increase proven capacity of national lithium reserves. Major mines that are currently in operation include the Bikita lithium Mine, which holds approximately 11 million tonnes of lithium ore, and Arcadia mine, which holds 26 million tonnes of lithium ore. It should be noted that lithium ore is the unprocessed raw resource of the metal that needs to be chemically processed to obtain a usable material.

Revenue Opportunity

If the mining of lithium in Zimbabwe can increase in capacity to 2% of the global supply, it can capture a total addressable EV battery market of $5 billion by 2030. As the IMF estimates Zimbabwe’s GDP to be $36 billion, full optimization of Zimbabwe’s lithium battery revenue opportunity can grow current GDP by approximately 14%. However, in order to obtain this growth in the economy, policies and actions to grow the industry and market infrastructure, as well as the acquisition of technical capabilities must be introduced. 

The market opportunity presents an idea for the targets that Zimbabwe can reach moving forward. For a deeper dive into the capabilities needed for a future state where the entire EV battery value chain potential is realized, we will assess the associated sectors in which the country operates.

Current & Future Presence 

Raw Mineral Mining 

• Given its vast lithium reserves, the upstream process of mining is where the country is strongest, and has sufficient infrastructure and operational capabilities for future discovery and expansion.

  
  

Mineral Refining

• This is an area where Zimbabwe is yet to establish a presence in, but is actively trying to build up capabilities in this aspect of the EV battery value chain.

• Zimbabwean state-owned mining company Kuvimba House signed a US$310 million Build, Operate, and Transfer agreement in July 2024 to construct a three million ton per annum lithium processing plant.

• Under government pressures to expand down the value chain, four mining companies proposed plans in May 2024 to construct lithium refinery plants. 

• The Chinese mining company Sinomine has also committed US$500 million to build a lithium refinery in Zimbabwe within the next three to five years.

Battery Production

• Activity in this downstream link is still in its early stages, as local companies such as Verify Engineering have started producing lithium-ion batteries, which are contributing to the solar power market and enhancing energy access across the region.

• The largest gap in this area will be in the form of the technical know-how that is needed in the country to build this expertise. Zimbabwe will have to work towards encouraging Foreign Direct Investment (FDI), or seek partnerships with stakeholders in the global battery industry that already have established business models and expertise. 

There are still gaps between the capabilities of the Zimbabwean workforce and hard infrastructure with the realization of downstream expansion on the lithium supply chain. Therefore, actions from the government, financial institutions, and educational institutes are needed to fulfill the ambitious goals to capitalize on the growing revenue opportunity. So far, key stakeholders have already kickstarted initiatives to support this transition and are setting up the country to reach the potential benefits that downstream synergies can provide.

Policy

Base Minerals Export Control: In December 2022, the Zimbabwe government introduced an act to ban any export of unprocessed lithium ore to decrease the power of individual, artisanal miners, and grow the downstream business domestically to add value to their metal products through processing and battery manufacturing. 

Export Royalties: The Zimbabwean government stipulates a 5% royalty on any lithium that is exported.

Financing 

Financing of lithium projects largely originates from Chinese mining companies who are looking to establish a bigger presence in the African critical mineral market. However, the strong ambitions of the Zimbabwean government mean that they also contribute a share of the investments into mining and lithium infrastructure.

Chinese Investments

• Chinese-owned mining companies have invested over US$1 billion in acquisitions and operations of lithium mines in 2022 and 2023 alone. 

• The Sinomine Resource Group, a Chinese mining company, runs Bikita Minerals and has invested US$500 million to establish lithium production and battery manufacturing capabilities in Zimbabwe. 

  
  

Government Driven Initiatives

• In 2023, the President commissioned a US$300 million lithium mine at Prospect Lithium Zimbabwe after its successful construction within nine months

• In 2021, the President also commissioned a pilot petalite processing plant at the same mine which initiated the expansion of the lithium industry

• The government is in the process of constructing a Mines to Energy Industrial Park as a hub for mineral beneficiation. This project will include the construction of two 300 MW power stations, a coking plant, a lithium salt plant, and a graphite processing plant.

  
  

Technical Capabilities

• The Harare Institute of Technology (HIT) is beginning commercial production of lithium batteries for EVs

• Technical capabilities primarily arise via partnerships with Chinese firms, and help to ensure operational expansion and quality control

• Training programs from joint ventures are facilitating skill development for local engineers

• Zimbabwean company Verify Engineering has started lithium battery production

By building upon these actions, Zimbabwe can effectively increase downstream operation capacity. 

While there are significant revenue and green transition opportunities for Zimbabwe to explore through expanding downstream capabilities, there are still risks that are associated with the increased operations in relation to the environment, final product pricing, and recycling considerations.

Risks 

Environmental Damage

• Lithium mining releases toxic metals that contaminate water sources, which threatens humans and biodiversity in the region.

• Water usage in the lithium mining process is substantial with 67% of the rural population having access to safe drinking water, water usage will only increase the downward pressure on the resource.

Price Changes

• Lithium-ion battery prices globally are dropping significantly, with it decreasing 82% from 2013 to 2023. This may reduce estimated market opportunities moving forward, and apply pressure on returns of the high investments in lithium processing infrastructure. 

• Raw material costs for lithium-ion batteries soared by 300% to 700% from March 2021 to March 2022. While this may be a revenue opportunity on the raw lithium side, the expansion downstream will feel more bottom-line pressure. Overall this effect on the downstream businesses could be less pronounced if the country houses every link in the value chain. 

Recycling Capabilities

• Currently, 5% of global lithium-ion batteries are recycled. This share must be improved for less Scope 3 emissions from upstream operations in Zimbabwe. 

Overall, Zimbabwe is actively establishing pathways to expand downstream along the lithium battery value chain from its incumbent mining operations. With government policies to limit raw material exports, domestic and foreign investments into processing infrastructure, and partnerships to expand technical expertise, Zimbabwe is well-poised to establish itself as a lithium powerhouse globally as it accelerates efforts to gain market share in these industries. However, stakeholders concerned with sustainability must not only see the positive clean energy expansion of the projects but must also be aware of the negative environmental effects that lithium capability expansions can produce and establish practices to limit harm to the local environment and to human health.