Reclaiming a billion-dollar venture from illegal miners
Raymond Jaravaza Correspondent
STANDING in groups on the lower slopes of a huge mountain in the Sandawana area of the vast Mberengwa District, young men spoke to one another in hushed tones as though they were afraid anyone within earshot might pass on details of the conversation to the police.
Just two days before, a major police operation had driven out hundreds of young men from the mountain, where they had been scrambling for lithium, blasting the precious mineral from the belly of the earth and selling it to buyers in truck loads.
Sandawana, a remote and quiet rural area in Mberengwa, had suddenly been turned into a hive of activity as illegal miners scrambled for lithium — dubbed the white gold — in an unprecedented rush for the mineral never before witnessed in the area.
Before long, multitudes of young men from as far as Mutare, Gwanda and Beitbridge had literally camped at Sandawana mountain in search of the mineral, whose value and importance in the world market continues to skyrocket as the demand for electric cars keeps surging.
Zimbabwe has the largest reserves in Africa and the fifth largest worldwide.
It was mid-November last year and the Chronicle had been tipped about the lithium rush in Mberengwa and a trip to the area gave the publication an insight into the dealing and wheeling happening in the heart of the district, making it the first mainstream newspaper to break the story.
Ever skeptical of strangers, the illegal miners did not trust new faces in the area in the aftermath of the police operation that drove them out of business.
A drive up the mountain was an eye opener of the destruction of the environment in the search of lithium with huge open pits scattered all over the place as if chunks of the mountain were being meticulously chopped off the face of the earth.
Piles of lithium ore, despite the successful police operation that drove away the hundreds of illegal miners, still remained on top of the mountain and would be clandestinely loaded into trucks at night, away from the prying eyes of law enforcement authorities.
A group leader of one of the illegal miners told us there they were selling a tonne of lithium ore for US$120 and insisted that the transaction was a cash only deal.
Eight months later, sanity at the mountain prevails following the coming in of a major player in the area — Kuvimba Mining House (KMH), priming the sector for a massive investment outlay.
KMH announced it would be developing a US$3 billion Sandawana Mine and more than 600 000 tonnes of high-grade lithium ore valued at over US$216 million has been mined and stockpiled.
Sandawana Mine has high-grade lithium deposits.
The plant is expected to be commissioned within 18 months from the time of the announcement at the end of July.
Already, KMH has injected US$56 million towards reviving operations and exploring for lithium and other mineral resources.
The proposed project comes at a time when investments in the country’s lithium sector are on an upward trajectory.
Lithium is the booming mineral in the Zimbabwean mining sector, with world demand rapidly rising as manufacture of lithium-ion batteries soars.
Kuvimba Mining House is carrying out a four-phased extensive exploration programme to determine the lithium mineral resources and reserves.
The scope of the exploration programme encompasses other mineral resources, including beryllium, tantalite and gold.
The firm says the three exploration companies led by an international entity are on a fast-track exploration programme with 33 drilling rigs on site.
Kuvimba Mining House Group chief executive, Mr Simba Chinyemba said feasibility studies for a 4,5 million floatation plant are underway which will produce 700 000 tonnes of six percent concentrate.
“The plant is expected to be commissioned within 18 months. To achieve this, KMH is evaluating financing and technical arrangements with some of the world’s largest companies in the lithium battery technology space.
“Discussions are at an advanced stage with at least three potential partners,” said Mr Chinyemba.
While the discussions were said to be highly confidential, it is expected that Sandawana Mine valuation will range between US$2,5 billion to US$3 billion once fully operational.
A large state-of-the-art laboratory has been completed at the mine while lithium off-takers have been identified for the first 18 months, which will generate approximately US$700 million in the next 18 months after the first phase of the road network has been rehabilitated.
Sandawana Mine plans to construct a new 35-kilometre road and rehabilitate as well as asphalt surface a road network of over 115kms.
Another key investment is the construction of a 60 megawatt solar plant with feasibility studies underway.
The electricity produced from the plant will also benefit local communities.
The peak capital investment demand for the plant construction project is approximately $US300 million.
Added to that, the mega project has in the past three months already employed more than 1 000 locals.
Given the enormous scale of the entire project, more people are expected to be employed.
In 2019, the Second Republic launched the US$12 billion mining industry roadmap to be attained by the end of this year with lithium, one of the strategic minerals to the achievement of the envisaged milestone, expected to contribute US$500 million by the end of 2023.
Gold, which is the major foreign currency earner is anticipated to contribute US$4 billion, platinum (US$3 billion), diamonds (US$1 billion) while chrome, ferro-chrome and carbon steel will generate US$1 billion, and coal (US$1 billion).
Other minerals are expected to generate US$1,5 billion.
Before the launch of the mining industry roadmap in 2018, mining exports generated US$2,7 billion annually but the figure jumped to US$5,3 billion by 2021.
At present, the mining sector accounts for 73 percent of foreign direct investment, 83 percent of exports, 19 percent of Government revenues, two percent of formal employment and 11 percent of individual incomes.
Gold has been the mainstay of the economy for years but smuggling through porous border points to date remain a major challenge.
In 2020, Government revealed the country was losing at least US$100 million worth of gold every month, which is being smuggled out of the country through porous borders with authorities hard at work in implementing measures to plug the leakages.
Gold is the country’s biggest foreign currency earner. In 2019, the country earned US$946 million from US$1,3 billion in 2018 from exports of the metal.
The coming in of Kuvimba Mining House should see an end to the illegal smuggling of lithium.
With the world moving towards more projects and activities that require lithium, investors have moved swiftly into the lithium extraction business.
According to the World Economic Forum, 540 000 tonnes of lithium were mined globally in 2021. This is expected to increase to 1,5 million tonnes and three million metric tonnes by 2025 and 2030, respectively.
Value addition and beneficiation
The ban on exports of raw lithium ore and unpurified lithium salts is a piece of legislation that must be embraced by the populace as it seeks to enhance the country’s value addition and beneficiation thrust which seeks to ensure that Zimbabwe derives maximum economic benefits from its natural resources.
As explained by the former chairperson of the Parliamentary Portfolio Committee on Mines and Mining Development, Cde Edmond Mkaratigwa recently, the ban was one of the control measures meant to ensure there is full accountability of natural resources leaving the country.
Lithium is fast gaining popularity across the world as a critical mineral in the manufacturing of batteries mainly for electric cars, whose demand is rising especially in developed countries.
Scaling up domestic value addition and beneficiation is at the heart of the Government’s strategy to grow mining sector earnings to US$12 billion by the end of this year.
Already, the country is attracting foreign direct investment into lithium exploration and mining with projects such as the Arcadia project near Harare, the Zulu Lithium project in Insiza District, Matabeleland South, and Kamativi in Hwange District underway.
“Government plans to beneficiate lithium and we are advancing the idea, which will be implemented soon.
“Government wants to find out if it is getting real value from the mining of lithium and the long term strategy is to value-add and beneficiate the mineral as opposed to exporting ore,” he added.
The massive growth of mining investments under the Second Republic is creating thousands of jobs while the steady increase in precious minerals output is enhancing economic stability.