The Sunday Mail
AUSTRALIAN firm Prospect Resources is maintaining a long-term view on its investments in Zimbabwe, despite the plunge in international lithium prices last year due to market oversupply and less-than-expected demand in key markets.
Zimbabwe relies on its minerals for foreign currency generation, with lithium being one of the key resources to drive short- to medium-term growth.
Lithium is an integral part of Zimbabwe’s plans to grow mining to a US$12 billion industry.
The mineral, however, saw its prices plummet on international markets in 2023 due to oversupply fears and slow industrial growth. But analysts and miners say the metal is here to stay and demand will pick up as global economies recover.
Slowing growth in electric vehicle (EV) sales, including in the top EV market, China, and a market oversupply in battery metals sent lithium prices crashing by 80 percent in the past year, prompting lithium miners to pause and scale back expansion projects.
Prospect Resources and Marula Mining, two of several investors developing lithium mines in Zimbabwe, recently said they will briefly shift focus to other battery metals such as copper around the country and on the continent.
Prospect Resources sold its controlling interest in the Arcadia Lithium project in 2022 in a multimillion-dollar deal but maintained a presence in the sector and is making good progress in the development of its new lithium project in the country, Step Aside.
The Australian company recently said it was pleased to announce further encouraging assay results from the completed Phase 3 exploration drilling programme at the Step Aside Lithium Project.
Prospect said the result effectively derisked the proposed Phase 4 drilling of the WinBin deposit further south of the original discovery hole cluster, by confirming high lithium grades and spodumene mineralisation exists.
Managing director Sam Hosack has, thus, maintained a positive long-term outlook for lithium, despite the current lull in prices on the international markets.
Writing on his social media account X, he stated: “Despite the recent pullback in lithium, @ProspectResLtd strongly believes the long-term fundamentals of the battery sector are strong and will stay the path. We continue business development activities in other electrification commodities, with the current focus on copper and rare earths.”
Prospect Resources will, thus, extend its focus beyond lithium. The decision to explore opportunities in copper and rare earths reflects a pragmatic approach to navigating the fluctuations in the battery metals market.
While the current state of lithium might present challenges, Prospect Resources remains steadfast in its commitment to the long-term potential of the battery sector, energised by the success achieved with the Arcadia project near Harare.
After years of development and investing in one of Africa’s largest lithium mines, Prospect Resources sold the project to Chinese batteries mineral company Huayou Cobalt.
Prospect sold its 87 percent interest in the Arcadia project in Zimbabwe to a subsidiary of China’s Huayou Cobalt for US$377,8 million. Easily, this explains the firm’s positivity regarding potential returns from the sector.
Zimbabwe has also seen frenzied interest in the country’s lithium sector, with several projects at different stages of development across the country, which explains why Prospect is among investors with keen interest in the mineral.
In an interview, Marula Mining chairman Richard Lloyd said: “In 2024, we are moving forward with Blesberg Mine, which gives us tantalum, but we believe in the battery industry and Marula is moving in strategically, starting with those closer to positive cash flow.”
The drop in global lithium prices was also due to raw material providers who invested heavily in lithium mines in the past two years to meet growing demand; however, they outproduced the current demand. As a result, lithium prices crashed last year by over 80 percent to the lowest level since 2020, at US$13 200 per tonne in 2023.
JP Morgan Chase analysts believe that without action, by 2030, there will not be enough lithium to meet the combined demands of the clean energy transition and the United Nations’ Sustainable Development Goals.
“Lithium has become ubiquitous in the modern world and humanity’s transition to net zero carbon emissions. Present in a multitude of electronic products, lithium is integral to batteries for use in key green technologies, such as electric vehicles, solar panels and wind turbines,” they wrote in their ‘Lithium here to stay’ 2023 analysis.
Lithium’s high energy density and lightweight nature make it the ideal candidate for high-performance energy storage batteries. Lithium-ion batteries, the leading technology that exploits this key resource, have benefits such as high stability and longevity, low self-discharge rates, high voltage capacity and rechargeability.
“Technical evolution is not the only factor driving this increased demand for lithium extraction. Environmental regulations encouraging the move from fossil fuel exploitation in transportation and energy also play a crucial role,” JP Morgan Chase added.
Zimbabwe’s lithium exports increased by more than 1 000 percent since 2018 to US$209 million by September 2023, according to a speech by Mines and Mining Development Minister Zhemu Soda during the official opening of Bikita Minerals last year.
With the largest lithium deposits in Africa and ranking seventh in production in the world, Zimbabwe continues to ramp up production amid growing demand for the mineral. Active producers in the country include Bikita Minerals, Prospect Lithium Zimbabwe and Sabi Star.
Several other major producers are expected to start operations this year and these will contribute to the expansion of the local lithium sector.
“The exports of lithium have increased significantly from 2018 up to 2022. The respective export revenue generated from the export of lithium during these years grew from US$1,8 million in 2018 to US$70 million in 2022.
“By September 2023, a total of US$209 million had been realised from lithium exports, which is a very impressive improvement; materials making up batteries are expected to have significant market expansion in the near future as their importance for the global energy transition increases,” Minister Soda said.
Many experts believe lithium is crucial to sustainable development and the circular economy. Due to the mineral-rich nature of the current transition to a more sustainable future involving widespread electrification and technological evolution, lithium demand is expected to increase in the coming years.