- Lithium carbonate prices hit CNY 75,000 (US$10.5k) per tonne, the lowest in over three years
- EU imposes a 9% tariff on Tesla EVs from China compounding trade barriers
- Zimbabwe’s lithium exports decline to US$185.4 million in the first half of 2024, yet the country still aims for US$500 million in lithium revenues
Harare- Lithium carbonate prices have plummeted to CNY 75,000 per tonne equivalent to US$10 529 , marking the lowest level in over three years amid increasing fears of oversupply. Miners are ramping up production and seeking new reserves, with market forecasts predicting a nearly 50% increase in global supply this year.
Adding to the bearish market sentiment, the European Union has introduced a 9% tariff on Tesla electric vehicles (EVs) produced in China, exacerbating trade barriers that already range from 36.3% to 17% for China-based EV manufacturers.
The United States has also intensified its trade measures, quadrupling duties on Chinese EVs to 100%, impacting the cost of input materials for battery producers.
During the first half of 2024, global lithium prices dropped sharply to US$13,798 per tonne, down from US$55,159 per tonne in the same period of 2023. This drastic decline is primarily due to excess supply from major producers such as Australia, Chile, and Zimbabwe, coupled with weaker-than-expected demand for electric vehicles.
Consequently, Zimbabwe's lithium exports fell from US$189.5 million in the first half of 2023 to US$185.4 million in the same period of 2024, though the country still anticipates reaching US$500 million in lithium revenues.
Despite the current price slump, projections indicate that prices may recover in the medium term as demand for energy transition technologies, including EVs and renewable energy solutions, outpaces supply growth.
According to GlobalData, Zimbabwe is the world’s sixth-largest lithium producer, with output increasing by 428% compared to 2022.
After experiencing a decline in production over the previous five years, Zimbabwe’s lithium output is expected to rise at a compound annual growth rate (CAGR) of 31% between 2023 and 2027.
With substantial lithium deposits, Zimbabwe has the potential to fulfill up to 20% of global demand for this essential metal.
China remains the largest foreign investor in Zimbabwe's lithium sector, driving production from just 86,000 tonnes in 2022 to 1.6 million tonnes in 2023, as reported by the Chamber of Mines.
Projects, including Bikita Minerals, Sabi Star, and Prospect Lithium, have significantly boosted exports, which surged more than 850% from US$70.6 million in 2022 to US$674 million in 2023.
Chinese companies have invested over US$1 billion in acquiring lithium mines and establishing processing plants since 2022.
Notable transactions include Huayou Cobalt’s purchase of Arcadia Mine for US$422 million and its subsequent US$300 million investment in processing facilities.
Sinomine acquired Bikita Minerals for US$180 million and allocated US$200 million for processing, while Chengxin purchased a 50% stake in the Sabi Star Mine.
However, the aspirations for Zimbabwe's lithium sector may be hindered by high operating costs, including expensive electricity, frequent blackouts, and elevated tax rates.
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