The Sunday Mail
Business Reporter
The acquisition of Prospect Resources Plc, developer of the Arcadia lithium project, by Chinese battery minerals giant Zhejiang Huayou represents a giant leap in the development of the country’s lithium mining industry, a company official said.
Australia Stock Exchange (ASX)-listed Prospect last week executed a binding share sale agreement with Huayou for the sale of its 87 percent shareholding in Prospect Lithium Zimbabwe, owner of the Arcadia lithium project near Harare, in a deal valued at just over US$400 million.
The lithium project is estimated to produce an average of 75 000 tonnes per annum (tpa) of spodumene and 155 000tpa of petalite concentrates during its 20-year mine life.
Prospect Resources director Mr Paul Chimbodza said the coming in of Huyaou was a significant development for the progression of the Arcadia project in particular and growth of Zimbabwe’s lithium industry in general.
He said the project needed an investor with the wherewithal to develop the asset.
“The coming in of Huayou brings in an entity that has got the financial resources and the technical resources in that they are already involved at a bigger scale in battery minerals,” said Mr Chimbodza.
“Huayou being one of the largest in the business in the world, with a market cap of US$28 billion, is a very good endorsement on Zimbabwe’s mantra ‘Zimbabwe is open for Business’.
“The company’s decision to choose Zimbabwe out of all these countries that have got lithium in the world is a very good step for Zimbabwe.
“It also allows for the project to be implemented at the nameplate capacity instead of being implemented in a modular way.”
The company expects the transaction to be completed by March this year or early in the second quarter.
The deal marks Huayou’s second foray into lithium, a key ingredient in rechargeable batteries, in the space of a week.
It is the latest acquisition of overseas battery mineral resources by Chinese companies looking to shore up supply to meet demand from the burgeoning electric vehicle (EV) sector.
Huayou — the world’s biggest producer of cobalt, another mineral used in batteries — earlier said it would pay US$377,8 million for Prospect Resources’ 87 percent stake in Arcadia owner Prospect Lithium Zimbabwe.
It will pay another US$44,2 million for the 6 percent stake held by Professor Kingston Kajese and the 7 percent held by Tamari Trust, which previous Prospect filings show is linked to Paul Chimbodza, executive director of Prospect Lithium Zimbabwe.
The transaction with China’s Huayou represents the culmination of the strategic partnership process undertaken by Prospect since August 2021.
Last month, Prospect received seven non-binding proposals for the advancement of Arcadia from a range of international parties.
The proposals encompassed structures including development of joint ventures, offtake prepayment debt funding and acquisition of Prospect’s interest in Arcadia.
Prospect Resources said the transaction vindicated the strong support by the Government of Zimbabwe through the progression of Africa’s most advanced lithium project still under development.
This also demonstrated benefits accruing from Arcadia’s Special Economic Zone status.
Lithium is an integral part of the Government’s plan to grow the mining sector to a US$12 billion industry by 2023 from US$2,7 billion in 2017.
Essentially, the sectoral contribution of lithium is expected to grow to US$500 million annually by then. Industry players project demand for the mineral to grow at a compound annual growth rate of 30 percent through 2023 from 2020 levels.
This puts mineral-rich Zimbabwe, which is already the world’s fifth-largest producer of the key ingredient in batteries, in good stead to draw significant benefits from exports.
Lithium is now widely regarded as the “new gold”, which could soon power producing countries as the world drifts towards exclusive use of lithium-ion-powered electric vehicles.
Arcadia plans to process 2,4 million tonnes of ore per year but has not yet reached commercial production.
Prospect Resources said in July the first batch of petalite from pilot production had been delivered to off-take partner Sinomine and that it was also working on spodumene samples.
The Arcadia lithium project was proposed to be developed in two phases, with the first phase involving the construction of the mine and the concentrator.
The second phase will involve the expansion of the mine site.
