China’s Sinomine joins queue of lithium buyers with US$180m deal for Bikita Minerals

Zimbabwe mining lithium
Trucks at Bikita lithium mine: Zimbabwe hoping to become a major lithium producer

Sinomine Resource Group is spending US$180 million to buy a controlling stake in Bikita Minerals, Zimbabwe’s oldest lithium producer, joining the race among big international firms to secure supplies of in-demand battery materials.

Through its Hong Kong-listed unit, Sinomine is buying 100% of African Metals Management Services and German investor Wilfried Pabst’s Southern African Metals and Minerals, the Mauritius-registered companies which hold a combined 74% in Bikita Minerals.

The acquisition is still subject to approvals by governments of China, Mauritius, and Zimbabwe, Sinomine says. The company also plans to buy out the other shareholders to gain 100% of Bikita Minerals. The others are Dzikamai Mavhaire​​ (16%) and Nehemiah Mutendi 5.25%.

Sinomine’s deal values Bikita Minerals at around US$243 million. That would give Mavhaire about US$39 million and Mutendi some US$12.7 million, should they decide to sell.

Sinomine says the acquisition is necessary to “increase the company’s lithium mineral resource reserves, improve the company’s lithium salt business raw material self-sufficiency rate”. But the company cautions that the resource and reserves numbers for Bikita are still inconclusive, and that more data will be needed on recoverable reserves. Previous estimates have put Bikita’s lithium ore reserves at 29.4 million tonnes.

“The acquisition target company is located in Zimbabwe, and the follow-up operation of the mine is subject to Zimbabwe’s macro-environment, industry policies, exchange rate fluctuations and laws,” Sinomine said.

The Sinomine deal is the latest show of a growing interest by large lithium companies to secure lithium resources to prepare for anticipated growth in demand for the metal.

Last December, Prospect Resources, which is developing the Arcadia Mine in Goromonzi, announced it was selling the company to Huayou, one of the world leaders in the manufacture of batteries, for US$422 million.

This is, however, not Sinomine’s first dance with Zimbabwean lithium.

In 2018, Sinomine, bought a 10% stake in Prospect and agreed to buy up to 390 000 tonnes of spodumene concentrate and over one million tonnes of petalite over seven years. This agreement has now been cancelled to make way for the Huayou deal. Sinomine was paid US$8 million for the cancellation, but remained a 4.86% shareholder in Prospect.

Bikita Minerals is the oldest miner of lithium-bearing minerals in the country. It started mining in the 1950s.

Bikita exports petalite, which is used by companies that make ceramics – such as tiles and kitchenware – as well as glass. The company does not yet produce spodumene, which is used by battery manufacturers. Currently, Bikita Minerals is exploring whether the spodumene resources it has are commercially viable. Should the results turn out positive, Bikita plans to set up a US$150 million plant to process the mineral, the company has said previously.

Chinese companies are buying up lithium projects around the world to secure supplies. By October, Chinese firms had bought 6.4 million tonnes of lithium resources in 2021. That almost matches the 6.8 Mt bought by all other companies in 2020. Chinese battery makers won bids worth US$1.58 billion in 2021, according to S&P Global Market Intelligence.