Huayou Cobalt, the company that has bought the Arcadia lithium mine from Prospect Resources, says it has budgeted US$300 million to bring the project to production.
The company bought Arcadia for US$422 million in December, in the largest of a series of acquisitions in Zimbabwe by mostly Chinese and UK firms looking to secure supplies of in-demand lithium.
“Huayou intends to develop the project rapidly over the next year and invest around US$300 million to develop the mine and construct a processing plant with a capacity to treat around 4.5 million tonnes of ore and produce 400,000 tonnes of lithium concentrate per annum,” according to Huayou Cobalt Zimbabwe general manager Haijun Zhu.
In 2021, Prospect had completed the construction of a pilot plant, one step towards building a full processing plant at the mine.
An optimised feasibility study done by Prospect last year, before the sale, had set a budget of US$192 million for capital expenditure.
That study estimated that the mine would have an average annual spodumene production of 147 000 tonnes, which is more conservative than the new owners’ projection of 400,000 tonnes per year. Huayou’s estimate of 4.5 million tonnes of ore per year is also higher than Prospect’s 2.4 million tonnes.
The life of mine is estimated at 18 years.
Based on lithium price forecasts by commodity analysts Roskill, Prospect had estimated annual profits of US$175 million once Arcadia starts full production.
According to Huayou’s Haijun, Arcadia plans to employ 600 local staff for the construction phase and up to 900 when full production starts.
In 2019, Prospect got Special Economic Zone status, which gives it generous tax holidays and lowers the cost of developing the project.
Huayou is the world’s biggest producer of cobalt, one of the key components in batteries. It has also recently bought up lithium mines and battery manufacturers. Chinese companies dominate battery manufacturing, accounting for 80% of world capacity, and are dominating the race for new lithium resources globally.
