HARARE, Sept 27 (AGCNewsNet) - Chinese miners, Zhejiang Huayou Cobalt Co., and Tsingshan Holding Group Co. are moving forward with plans to develop a lithium deposit in Zimbabwe, despite a sharp decline in global lithium prices. The two companies have partnered with Zimbabwean state-owned Kuvimba Mining House to build a mine and processing plant at Sandawana, located in the country’s southern region, according to Kuvimba’s acting CEO, Trevor Barnard.

Huayou and Tsingshan, which already operate lithium projects in Zimbabwe, are currently finalizing a comprehensive feasibility study to determine the total cost and output capacity of the project, with initial estimates pegging the construction cost at $250-$300 million. The plant is expected to produce 500,000 tons of lithium concentrate per year.

Although global lithium prices have dropped nearly 90% since late 2022, leading to production halts elsewhere, Chinese companies continue to invest in Zimbabwe’s lithium sector to secure raw materials for their domestic refineries. According to Barnard, despite current price levels, the economics of the project show that it will remain profitable.

Zimbabwe has emerged as a key lithium producer over the past two years following a surge in prices in 2021 and 2022, which spurred acquisitions by Chinese firms such as Chengxin Lithium Group Co. Ltd. and Sinomine Resource Group Co. Ltd. Huayou, for example, has invested more than $700 million in the Arcadia mine, while Tsingshan operates the Gwanda project. CRU Group estimates Zimbabwe will account for about 10% of global lithium production in 2024.

Huayou, a major manufacturer of battery materials, also owns cobalt projects in the Democratic Republic of Congo and nickel operations in Indonesia, while Tsingshan is the world’s leading producer of stainless steel and nickel and is expanding its footprint in the lithium market.

Under the terms of the agreement, Huayou and Tsingshan will not hold equity in the Sandawana project. Instead, they will transfer ownership back to Kuvimba after five years, once their investment has been recovered. The specifics of an offtake agreement for lithium produced at the site are still under negotiation.

Kuvimba aims to complete the construction of the Sandawana plant, which is set to become Zimbabwe’s largest lithium producer, by the end of 2025. The Sandawana site, formerly operated by Rio Tinto as an emerald mine, has become the focus of renewed interest due to Zimbabwe’s abundant lithium resources. Kuvimba is also in discussions with potential investors for two other early-stage lithium projects, including a partnership with British businessman Algy Cluff, who has a history of involvement in African mining and the North Sea oil and gas industry.

Lithium prices are expected to recover strongly by 2026-2027, but for now, Chinese firms remain undeterred, continuing their push to secure supply chains for the booming electric vehicle and battery markets.