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

China’s Zhejiang Huayou Cobalt 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.

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 to 600 cubic metres of natural gas, 2.2 t of concentrated sulfuric acid (98.5%), 2 t of first-class sodium carbonate, 20 kg of first-class sodium hydroxide, 4 t of heavy calcium powder, and 1.6 t 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.