eBusiness Weekly
Golden Sibanda
Chinese firm, Zhejiang Huayou Cobalt Co Limited, has completed the acquisition of Australian firm, Prospect Resources Plc’ Zimbabwe operation, Arcadia project for US$377,8 million.
Australia Stock Exchange listed Prospect, said the sale of its 87 percent interest in the Arcadia Lithium Project to a subsidiary of Zhejiang Huayou Cobalt Co, Limited was completed on Wednesday (April 20 2022).
Zhejiang Huayou Cobalt Co Ltd is a China – based company mainly engaged in the research, development and manufacturing of new energy lithium battery materials and cobalt new material products. The Company mainly operates through three businesses.
The acquisition of Africa’s most advanced lithium project by the cash-rich Chinese new energy lithium-ion batteries producer sets up the Arcadia project for rapid development.
Local businesses are set to massively benefit from the concluded deal through down-stream industries and other value chains that produce needed materials.
The transaction marked a third lithium project acquisition by a Chinese firm after Chengxin Lithium Group in November last year snapped up Sabi based Start Lithium Mine, owned by Max Mind Investments.
Similarly, Sinomine Resource Group, announced it had forked out US$180 million to acquire two entities that held 74 percent of Zimbabwe’s only active lithium mine, Bikita Minerals.
Lithium is an integral element of Zimbabwe’s short to medium term growth plans and the Government’s target to grow mining to a US$12 billion industry by 2030. The mineral is expected to contribute US$1,5 billion by then.
Globally, lithium has become a strategically important mineral, which Zimbabwe is fifth largest producer in the world with only a single active mine, due to its growing use in electric vehicles and many electric gadgets.
“Following payment of US$26,8 million in Zimbabwean capital gains tax and US$8 million to Sinomine in relation to the termination of the offtake agreement between Prospect and Sinomine, US$342,9 million was received on completion of the transaction.
“We are extremely delighted to have successfully completed the Transaction with Huayou. I would like to take this opportunity to express a sincere thanks to the Government of Zimbabwe.
“Without their strong support and vision we simply would not have been able to complete this Transaction, confirming indeed, that Zimbabwe is open for business and is a premier jurisdiction for the burgeoning lithium industry,” Prospect managing director Sam Hosack said in a statement.
Hosack said Huayou’s pedigree as a leading electric vehicle battery precursor producer opens up opportunities in Zimbabwe and supports our strategy both in Zimbabwe and the broader sub-Saharan region.
“The Transaction, being the culmination of years of effort progressing and developing the Arcadia Project to this point is a testament to the skills and expertise of the Prospect team, who are now firmly focused on the path ahead, to build the next iteration of Prospect, a developer of lithium and battery and electrification metals projects.
Although it has been known for almost two centuries, lithium is suddenly mak-ing the news: it is the primary ingredient of the lithium-ion batteries set to power the next generation of electric vehicles ( EVs) and, as such, could become as precious as gold in this century, analysts say.
Lithium is non-uniformly spread within the earth’s crust, sparking suggestions that Andean South American countries and other hard rock producers like Zimbabwe could soon be the “new Middle-East”, famed for its oil riches.
Energy storage, which should help mitigate the issues of pollution, global warming and fossil-fuel shortage, is becoming more important than ever, and Li-ion batteries are now the technology of choice to develop renewable energy technology and electric vehicles.
The present pro¬duc¬tion of lith¬ium is about half what would be needed to con-vert the 50 million cars produced every year into “plug-in hybrid electric vehicles”.
The demand becomes astronomical if one considers the full electric vehicles — which require an on-board bat¬tery of 40kWh. These numbers bring fears of a potential lithium shortage in a few decades, painting a dim picture, and huge opportunity for producers like Zimbabwe.
The present production of lithium is about half what would be needed to con-vert the 50 million cars produced every year into “plug-in hybrid electric vehicles”.
If all cars are to become electric within 50 years, fears of a crunch in lithium resources — and thus a staggering price increase such as that faced today with fossil fuels — are permeating.
Their particular physical, chemical and electro-chemical properties make lith-ium and its compounds attractive to many fields. Apart from the recent advent of lithium-based batteries, lithium niobate is an important material in nonlin-ear optics.
Engineers use lithium in high-temperature lubricants, to strengthen alloys, and for heat-transfer applications. It is also widespread in the fine chemical industry, as organo-lithium reagents are extremely powerful bases and nucleo-philes used to synthesise many chemicals.
Its effect on the nervous system has also made lithium attractive as a mood-stabilising drug and in nuclear research tritium (3H) is obtained by irradiating.
Annual demand has therefore grown by 7–10 percent, currently reaching about 160 000 tonnes of lithium carbon te per year — about 20–25 percent of which is for the battery sector.
Zimbabwe is among major lithium producers that may draw significant bene-fits from firm global lithium prices and high demand for the precious mineral due to expected supply deficit projected to start in two years.
Apart from Arcadia, other fledgling projects in Zimbabwe include the Zulu and Kamativi projects, while Bikita Minerals’ active operation is undergoing expan-sion to ramp up production.
