The Government has signed an MoU with Eagle Canyon International of Hong Kong and Pacific Goal Investment to develop an industrial park to process battery minerals such as lithium and nickel.
The ambitious plan would cost at least US$2.8 billion.
The park, to be located at Mapinga in Mashonaland West, would be home to lithium-salt and nickel-sulphate plants, a nickel-chromium alloy smelter, solar and energy storage plants, as well as two thermal power plants of 300MW each. It would sit on 30-50 square kilometres.
Zimbabwean lithium has attracted interest over the past year, with large Chinese firms such as Huayou Cobalt and Chengxin, plus a flurry of UK explorers, staking claims in deals worth over US$700 million combined.
This demand has excited the government, and President Emmerson Mnangagwa was only happy to appear with representatives of Eagle and Pacific Goal on Friday to sign an MoU leading to the development of the proposed park.
But, we have questions.
Question One: The power?
To produce lithium carbonate, lithium hydroxide and nickel sulphate at the scale the project promises, massive amounts of power would be needed.
According to a concept paper on the project, they plan to build two 300MW thermal power plants. The first, for US$250 million, would be commissioned in 2024. A coking plant with a production capacity of 1.2 million tonnes per year would also be built.
The company says: “The thermal energy created during the production of coke will be used to generate electricity, thus sustain the second 300MW power plant. The coking plant and the second power plant are estimated to require an investment of US$500 million and will be put into operation by the end of 2025.”
Each of the two 300MW thermal plants would need 1.5 million tonnes of coal per year. Part of this would have to be imported, as Hwange producers will not be able to immediately meet demand. Some of the needed 1.8 million tonnes of coking coal – used in blast furnaces to make steel – would also have to be imported.
But global funders – including China – no longer fund coal. The project promoters do not say how they would raise funding for the thermal plants. Last year, RioZim put its 1800MW Sengwa thermal power plans on hold after potential Chinese funders walked away.
Above this, battery producers use green energy for the convertors that make their battery-grade lithium. According to Huayou, for each tonne of battery-grade lithium, 2800kWh of renewable energy is needed.
Question Two: The raw materials?
The project will not mine on its own. The plan is to bring lithium concentrates from Prospect Resources, Bikita and Chengxin’s Sabi Mine. It would then turn this into battery-grade lithium.
According to the plan, “by the end of 2025, we will commission a lithium-salt plant that has an annual output of 100,000 tons of lithium salt, with lithium hydroxide and lithium carbonate accounting for 50% each, and a total output value of nearly US$8 billion”.
But the project’s estimates would suggest an unlikely scenario; that it will take in all the lithium concentrate produced by Sabi, Prospect Resources and Bikita Minerals.
It proposes to take in 300,000 tonnes from Sabi, an estimate that matches what the mine has said it would produce per year. The new project is also proposing to take in 800,000 tonnes of lithium concentrate from Prospect and Bikita, which is also just about all the concentrate the two mines combined plan to produce.
Crucially, Huayou, one of the world’s biggest battery metals companies, has said it’s not possible to produce hydroxides in Zimbabwe profitably for now. Yet, this is exactly what the energy park plans to do – even without all the supporting infrastructure and inputs.
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The energy park also say they will bring in 300 000 tonnes of graphite from Karoi, three million tonnes of nickel from Guruve and Chrome from the Great Dyke. There is no detail on these assets, and how, if the resources are there, they could be brought to production within the stated tight timelines.
Question Three: The who, what, and how
There is no information available publicly on Eagle International or its partners to make an informed call on their capacity to raise capital or build industrial parks.
Like many “mega deal” projects that have come before it, this latest plan is heavy on lofty promises of massive earnings. There is no detail on how the capital will be raised. Companies such as Huayou, Pan African Minerals and Sinomine have publicly disclosed their own capital raising plans.
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By 2025, they say, the lithium-salt plant would be giving out value of “nearly US$8 billion; a nickel sulphate processing plant with an annual output of 300,000 tons and a total output value of nearly US$2 billion; and a nickel-chromium alloy smelter with an annual output value of about US$1.8 billion US dollars.”
The total, of almost US$12 billion is, it appears, based on rough estimates worked out from current metal prices.
The New Energy Special Economic Zone Industrial Park is obviously exciting at a time debate about value addition is raging. But, as experience under the Mnangagwa administration has shown, Zimbabweans deserve closer scrutiny of billion-dollar investment pledges.
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