Of Lithium mines in Zimbabwe, separating chaff from grain
Nevanji Munyaradzi Chiondegwa
A lot has been said about Zimbabwe and its lithium.
The most recent point of outrage has been the sale of Arcadia Lithium shareholding by Australian firm Prospect Resources to Chinese firm Huayou International Mining.
Activists claim that the country should have interfered with the transaction because lithium is a resource of strategic importance.
While this sounds ‘clever’ at face value, it betrays duplicity on the parts of those anchoring the argument.
People crying over this issue actually do not firstly understand business nor have the finer details regarding mining.
First and foremost, this is purely a business transaction.
Someone owns an asset, its theirs, they hold it legally and are free to dispos of it within the legal frameworks of the country.
What was sold was not something owned by Zimbabwe, it was a private property held by a foreign firm which simply transferred their ownership to another firm.
Secondly, we always say and demand that Zimbabwe governement must respect respect property rights?
So if one owns a claim, they should be allowed to sell it to whomever they please at whatever price suits them, ‘willing buyer, willing seller”.
A simple process of the open for business mantra and the open market we are practising and which is advocated for by the West.
But let’s debunk this popular but spurious assertion flying around that we sold an asset for a song.
Before one cries that something was sold cheap, it is helpful to compare the purchase price with other similarly sized or even bigger lithium mines.
There should also be a consideration of the risk premium of an asset in Zimbabwe given our global credit rating which has been affected by illegal sanctions against the country.
The geopolitical nuances need to be read with the seriousness they deserve.
We should also consider how much an investor would have to spend to bring the plant to production.
CATL of China, the world’s largest EV battery maker which supplies Tesla,which some wanted Zimbabwe to partner with, bought Canada’s Millenial Lithium for US$298 million.
Millenial Lithium, a Canadian company, has two lithium mines in Argentina, larger than Arcadia’s potential (which we know was sold for US$422 million).
The Millenial mine sits in the Lithium Triangle, which includes Chile and Bolivia. The Lithium Triangle holds 75% of the world’s lithium supply.
Argentine mines also bought by large corporations include Rincon and Neo Lithium. Rio Tinto this year bought Rincon for US$825 million.
Rincon has total resource of 11.77 million tonnes lithium carbonate equivalent (LCE), compared to 1.24million tonnes at Prospect. In South America, lithium is extracted from brine – large salt pans – whereas in Zimbabwe, the lithium is mined from hard rock, making it more expensive to mine.
Lastly, this resource was owned by private citizens, not the governement or a parastatal.
The price at which they chose to dispose of an asset is their choice.
Once the State starts interfering in that process, investors both local and foreign will see Zimbabwe as an unattractive destination if we suddenly start shifting goal posts when it comes time to sell.
If we had a problem with such things we should have made it clear to investors at the outset, before they started buying assets in Zimbabwe, so that they would know the score and make informed decisions.
That is the beauty of this democratic system we longed for.
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