China's Huayou faces clash with regulator over Zimbabwe lithium project

Prospect Resources

28/06/2022 08:52

* Acquired Zimbabwe lithium project in $422 mln deal
    * Given five years to produce battery-grade lithium
    * Local battery-grade lithium production "not feasible"
-Huayou

    By Nelson Banya
    HARARE, June 28 (Reuters) - China's Zhejiang Huayou Cobalt
 603799.SS  faces regulatory pressure to produce battery-grade
lithium in Zimbabwe within five years, official documents seen
by Reuters show, something the miner has already said cannot be
achieved.
    China's biggest cobalt refiner acquired the hard-rock
Arcadia lithium mine just outside Harare for $422 million
earlier this year and has announced plans to spend $300
million. urn:newsml:reuters.com:*:nL5N2XG32A 
    But it has said production of battery-grade lithium in
Zimbabwe is "not feasible" due to a shortage of electricity and
other key inputs.
    However, as a condition for approving the deal the
Competition and Tariff Commission has stipulated that
battery-grade lithium be produced within five years.
    "The transaction was approved subject to the condition that
the merged entity, its subsidiaries, affiliates and successors
in title should undertake to produce battery-grade lithium in
Zimbabwe within five years of receiving this determination," the
commission said in a June 22 notice seen by Reuters.
    That is at odds with Huayou's stated plans to build only a
concentrator plant to process ore, not a converter for further
processing to produce battery-grade lithium carbonate. 
    "For each tonne of battery-grade lithium carbonate
production, it needs 2,800 kWh of green renewable power, 500-600
cubic metres of natural gas, 2.2 tonnes of concentrated sulfuric
acid (98.5%), 2 tonnes of first-class sodium carbonate, 20 kg of
first-class sodium hydroxide, 4 tonnes of heavy calcium powder,
and 1.6 tonnes of food-grade carbon dioxide," Huayou said in May
when it announced its investment plans for Arcadia.
    "There is a chronic shortage of these supporting and
auxiliary materials in Africa, and the costs incurred by
importation would be huge and unaffordable."
    Neither Huayou nor Zimbabwe's mines ministry responded to
requests for comment on the competition commission's directive.
    Mining analyst Paul Chimbodza said Zimbabwe, which has a 5%
tax on raw lithium exports to promote local processing, needs to
temper its "noble" battery aspirations.  
    "This young industry needs to walk before it can run,"
Chimbodza said.

 (Reporting by Nelson Banya; editing by Helen Reid and Jason
Neely)
 ((Nelson.Banya@thomsonreuters.com;))