The allure of the new political administration has convinced Australian Stock Exchange (ASX)-listed Prospect Resources to commit to a lithium project near Harare, which is expected to generate over $2,6 billion in revenues in the next two decades.
The Perth, Australia-based battery minerals company, which recently indicated that it had been forced to take up a controlling stake in the local lithium assets after the “positive changes occurring in Zimbabwe under the new Zimbabwe Government”, says the venture, Arcadia Lithium Project, was recently shortlisted as a priority by the Ministry of Mines and Mining Development through its 100-day programme.
In his inaugural Cabinet meeting on December 5 last year, President Mnangagwa challenged Cabinet ministers to identify quick-win projects that had the potential to positively impact on the economy within the 100-day cycle.
It is also believed that the mining development — understood to hold 26,9 million tonnes of ore, with a life of mine of 20 years — has also been identified as a priority project by the Office of the President and Cabinet.
Life of mine describes the time through which the identified mineral resources will be extracted.
In an investor presentation yesterday, Prospect Resources said the Arcadia Lithium Project, which is 35 kilometres west of Harare, will begin almost immediately subject to a capital raise of $52,5 million that is needed for the project.
Already, $10 million has since been raised through “an oversubscribed placing” that closed last month.
Mining and environmental approvals are now in place.
“Zimbabwe, under its new Government is “open for business”.
Prospect is receiving significant domestic support for its plans and operations from all relevant Government departments.
“Zimbabwe is again a focus for international investors and off-takers,” said Prospect Resources in yesterday’s presentation.
There are indications that further benefits might accrue for the local economy from the project as the Australian company is considering building a chemical plant for lithium carbonate on-site at Arcadia.
This will help add value to the mineral and also generate the maximum possible revenues from the resource.
Tests that were conducted in October last year proved that it was possible to produce battery-grade lithium carbonate.
“Rather than producing one tonne of concentrate that contains 4 to 6 percent lithium that sells at c. $400 to 900 per tonne that has to be transported all the way to China, subjected to a 17 percent tax, and then be converted to lithium carbonate and then potentially exported to battery makers elsewhere in the world, one can produce one tonne of battery-grade lithium carbonate with 99,5 percent lithium that sells at $10 000 to 13 500 per tonne, and can be exported directly to battery-maker end-customers.”
It will be the “first plant of this type in Africa and one of the few plants outside China,” added the company yesterday.
Last month, Prospect Resources commissioned a battery-grade lithium concentrate plant in Kwekwe, where small-scale production is presently underway.
Production will be ramped up to 100 kilogrammes per month by the end of June this year.
Commenting on the Kwekwe plant, Prospect Resources chairman Mr Hugh Warner said the new development represents “the business-friendly environment that Zimbabwe is rapidly becoming”.
“This is a significant achievement for both Prospect Resources and Zimbabwe. Producing high grade battery quality lithium carbonate that exceeds industry norms bodes well for the ultimate company goal of a large scale lithium car bonate facility in-country.
“This entire process has been designed and built in-country using local skills and services further demonstrating the business friendly environment that Zimbabwe is rapidly becoming.”
Prospect says the demand for lithium on the world market has outstripped supply as the demand for environmentally friendly electric vehicles (EVs) is about to reach “tipping point”.
China, which is the largest vehicle manufacturer in the world, plans to make 20 percent EVs by 2025, while Britain and France are targeting to make all their vehicles EVs by 2040.
Zimbabwe is the fifth-largest producer of lithium in the world.
Currently, production is taking place at privately owned Bikita Minerals, which allegedly has the largest-know lithium deposits in the world.
Last month, Government struck a deal with another investor to process lithium dump worth $1,4 billion in Matabeleland North.
Similarly, production will begin soon.