Shared refining hubs could unlock lithium value-addition goals

Martin Kadzere

Decoupling lithium extraction from chemical processing to build an inclusive industrial ecosystem could be a critical step in accelerating Zimbabwe’s value-addition goals, industry analysts have said.

The proposal comes as the lithium sector crossed a landmark milestone, generating US$2,1 billion in export revenues between January and September this year to overtake Platinum Group Metals (PGMs) as the country’s top foreign currency earner among non-precious minerals.

Analysts argue opening chemical refining infrastructure to a broader range of investors such as State equity funds, pension funds and private capital will de-risk the transition, relieve capital strain on primary producers and enable broader participation across the mineral value chain.

**Race against time **ahead of export ban

This comes as the December 31 deadline looms for the ban on lithium concentrate exports. Analysts have highlighted the urgent need for a collaborative funding model to meet these targets.

The Government’s deliberate beneficiation policy seeks to ensure that finite mineral resources are not permanently depleted without capturing maximum economic value domestically.

While the economic logic for downstream processing is undeniable, industry stakeholders note that chemical refining requires immense capital outlays, specialised chemical reagents, an uninterrupted power supply and a continuous supply of high-grade feedstock.

Expecting primary mining houses to single-handedly construct individual chemical plants alongside their extraction operations risks straining working capital and slowing down reinvestment into core mining activities. At the same time, small and medium-tier miners stand to benefit immensely from centralised, open-access toll-refining facilities, paving the way for broad-based industry participation.

Because entering the lithium value chain will soon require multi-layered investments spanning raw ore extraction, concentrate milling and sulphate conversion, centralised processing hubs could remove prohibitive capital barriers for smaller players who lack the funding to build standalone plants.

Establishing shared facilities will allow smaller operators to deliver raw concentrates for contract refining without incurring unsustainable debt.

Scaling up to fix trade mix

Furthermore, while the 3,8-times value multiplier achieved on lithium sulphate validates the Government’s policy direction, the current trade mix presents an immediate structural bottleneck. Exporting higher-value chemical salts at lower volumes yields total receipts that fall short of eclipsing the massive foreign currency revenues derived from high-volume concentrate sales.

Consequently, fully unlocking the benefits of value addition will require rapidly scaling up domestic lithium sulphate capacity.

Achieving true industrial scale goes beyond constructing isolated, standalone plants, it demands strategic co-investment into shared refining infrastructure.

Lithium sulphate accounts for just 8,64 percent of total national lithium sales, according to the latest figures from the Minerals Marketing Corporation of Zimbabwe (MMCZ).

Combined sales of spodumene, petalite and lithium sulphate accounted for 45,6 percent of total mineral revenues (US$4,735 billion), outperforming PGMs (US$1 729 billion, or 36,5 percent) by US$430 million.

Within the lithium portfolio, spodumene concentrate led individual mineral contributions at US$1,8 billion, a 368 percent year-on-year surge, at an average realised price of US$1 483 per tonne, while petalite sales rose 583,3 percent to US$155,29 million.

Between April and September alone, the processed chemical compound yielded US$190,52 million from 33 807 tonnes.

The value multiplier

At an average realised price of US$5 635 per tonne, sulphate delivers nearly 3,8 times the value of concentrate per unit sold, proving the absolute necessity of localising chemical refining. Zimbabwe’s operational domestic refining capacity for lithium sulphate stands at roughly 50 000 tonnes per year, generating US$281,8 million annually at current average prices. Even when an additional 100 000-tonne capacity plant at Bikita Minerals comes online by July next year, total national capacity of 150 000 tonnes (worth US$845 million annually) will still require complementary domestic refining infrastructure to absorb the total concentrate output.

Professor Gift Mugano noted that while the Government’s beneficiation policy remains necessary, strategic flexibility is crucial during rollout. To protect vital foreign currency inflows, he advised calibrating implementation timelines to operational realities on the ground without signalling a retreat from broader policy objectives.

“Beneficiation remains the right strategy for the economy,” said Prof Mugano.

“However, enforcement must respect operational realities. We must balance policy consistency with the practical need to prevent abrupt disruptions to mineral export earnings,” said Professor Mugano in an interview.

The Chamber of Mines noted that several lithium miners were making significant headway towards local processing, but warned that weak global prices continue to constrain capital.

“Some lithium producers are at an advanced stage of complying with the agreed beneficiation roadmap that will see them exporting lithium sulphate, albeit amidst cashflow challenges driven by subdued prices,” the Chamber said.

“In line with this progress, we appeal for Government support to defer the beneficiation tax for projects with verifiable milestones, allowing them to ringfence cashflows to finalise their lithium sulphate plants. For operations that cannot economically justify building their own processing facilities, we urge the Government to allow toll-treatment arrangements with producers holding excess capacity.”

De-risking through sovereign, private investment

To accelerate private capital deployment into shared processing facilities, analysts

** Read more on www.heraldonline.co.zw**

suggest offering targeted fiscal incentives such as structured tax holidays, customs duty waivers on specialised processing machinery and Special Economic Zone (SEZ) status to non-primary investors willing to construct refineries. In tandem with private capital, economic observers point to a major opportunity for direct State co-investment through the Mutapa Investment Fund, Zimbabwe’s sovereign wealth fund, alongside domestic pension funds to anchor regional processing hubs.

By taking strategic equity stakes alongside private investors, the state can de-risk capital projects, guarantee fair tolling access for small to medium mining houses and ensure that public institutions participate directly in the lucrative dividend yields generated by downstream chemical refining.

Resource life backs investment

Furthermore, introducing independent chemical refiners creates the critical mass needed to elevate Zimbabwe beyond intermediate chemical compounds like lithium sulphate toward battery-grade lithium carbonate, hydroxide and ultimately regional battery component manufacturing.

Analysts emphasise that capital deployment into chemical refineries is thoroughly justified by the longevity of Zimbabwe’s lithium deposits.

With major operations sitting on proven reserve lifespans exceeding 15 to 20 years, high-capacity processing plants represent secure, multi-decade assets rather than short-term speculative investments.

“Because our major lithium deposits have proven mine lifespans of well over 15 years, investing in specialised chemical refining infrastructure makes sound financial sense,” said mining analyst Mr Ron Ndeve.

“Long-life resources guarantee decades of consistent feedstock supply, providing third-party investors, state funds and pension managers with the long-term revenue visibility needed to recoup capital and earn substantial returns.”

Positioning Zimbabwe in the EV supply chain

Mr Ndeve said expanding domestic conversion capability is essential for long-term regional competitiveness.

“Lithium sulphate is an encouraging first step in a much larger industrial journey,” Mr Ndeve said.

“With broad participation from state funds and non-primary investors, Zimbabwe can seamlessly scale up from sulphate salts to refining battery-grade lithium carbonate and hydroxide.

“This is the exact bridge needed to position Zimbabwe as a global hub for electric vehicle component supply chains.”

Source: Shared refining hubs could unlock lithium value-addition goals – herald

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