ZIMBABWE'S lithium industry has revealed that the dramatic collapse in global lithium prices forced mining companies to retrench workers and postpone major investment projects, exposing the vulnerability of one of the country's most promising mining sectors to global commodity market swings.
Speaking at the annual conference of the Chamber of Mines of Zimbabwe in Victoria Falls on Thursday, Innocent Rukweza said the industry had been caught off guard by one of the sharpest price reversals seen in recent years.
Lithium prices surged to approximately US$86,000 per tonne in 2022 as demand for electric vehicle batteries soared, sparking a global rush to develop new projects and expand production capacity.
"That's when we saw a huge influx of people coming in and the prices reached a high of US$86,000," Rukweza said.
"A lot of the projects that we are talking about today were consummated during that period."
However, the boom proved short-lived as a combination of oversupply and slower-than-expected growth in electric vehicle demand triggered a severe market correction.
"As fate would have it, we saw a decline that we have never seen before. Things went south," he said.
Rukweza said many industry players initially believed the downturn would be temporary and that prices would quickly rebound.
"As they were going down, there is a drug that all of us have. It is called hope.
"We were hoping that it would go back to US$86,000.
"We continued to sniff on that drug called hope.
"But things became worse and worse through time."
Instead, prices plunged to lows of about US$14,300 per tonne, forcing mining companies to implement painful cost-cutting measures.
"We got to a point where we had to retrench. There were project delays," Rukweza said.
Although lithium prices have since recovered to between US$22,000 and US$25,000 per tonne, he warned that market conditions remain uncertain.
"So when you hear people say lithium prices are picking up, the context is important," he said.
"It is still a far cry from where we used to be. Prices are still volatile.
"They could go back to the US$14,000 mark."
The downturn has had a global impact, affecting producers across major lithium-producing regions including Australia, South America and Africa. As new mines came online and supply outpaced demand growth, producers worldwide were forced to suspend operations, cut jobs and defer expansion projects.
Zimbabwe, which has rapidly emerged as a significant hard-rock lithium producer, has been particularly exposed because of substantial recent investments in the sector.
Several Chinese mining companies have collectively invested billions of dollars in Zimbabwe's lithium industry in recent years as part of efforts to secure supplies of critical battery minerals required for the global energy transition.
Despite the market turbulence, Rukweza said investors remain committed to Zimbabwe's long-term lithium strategy and beneficiation ambitions.
According to the industry, approximately US$2 billion has already been invested in completed projects, while a further US$1.45 billion is earmarked for beneficiation initiatives, including lithium sulphate plants, concentrators and facilities designed to recover valuable minerals from mine tailings.
"So together, we are talking about US$3.4 billion that has been put on the table," Rukweza said.
"The number can easily be US$4 billion or US$5 billion.
"This is the level of commitment that we are putting through."
The industry expects annual turnover to reach about US$3.2 billion by 2030, supported by projected production of approximately 344,000 tonnes of lithium sulphate as Zimbabwe seeks to move beyond raw mineral exports and establish itself as a producer of higher-value battery materials.
However, the experience of the past two years has highlighted the risks associated with dependence on highly volatile commodity markets. While producers remain optimistic about the sector's long-term prospects, the sharp collapse in lithium prices has already translated into job losses, delayed investments and a significant reassessment of expectations surrounding Zimbabwe's lithium-driven economic growth story.
- NewsDay
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