Dubbed ‘white gold’, Lithium holds high significance in modern technology and industry. Rechargeable Lithium-based batteries are essential to power electric cars and store solar and wind energy. Known for its high energy density and long lifespan, Lithium-ion batteries are also used for consumer electronic devices such as smartphones and laptops. As the world transitions towards clean and sustainable energy, the easy availability of lithium would arguably determine the effectiveness and capability of executing different renewable energy projects in the future.

And the rapid adoption of electric vehicles is putting pressure on lithium mining. As a matter of fact, by 2030, the demand for lithium is expected to surge more than five-fold. Currently, more than 80 percent of lithium mining occurs in Australia and three Latin American countries: Chile, Argentina and Bolivia, and later exported to China for processing.

Over the years, China has attained a monopoly over a number of minerals’ supply chains, such as cobalt, lithium, and many rare earth metals. However, western governments and international companies are challenging the status quo and Africa could play a decisive role in this battle for lithium supremacy. In this regard, the ongoing dispute between the Namibian government and Chinese miner sets a precedent by underscoring the importance and the urgency for African countries to develop mining policies, export regulations, and strategies for using their abundant mineral resources.

Zimbabwe, the fifth-largest miner in the world and top producer of lithium in Africa is placing a significant wager on the mineral to boost its economy. The Zimbabwean government is aware of the value of lithium to the country’s economy. Not surprisingly, it intends to refine battery-grade lithium domestically to create value locally and establish the nation as a hub for refining lithium. Retaining a portion of the supply chain in Zimbabwe will increase revenue from mineral extraction for the country. Refining lithium domestically would not only boost economic growth but also create jobs for locals and infrastructure development. Zimbabwe prohibited the export of raw lithium in 2022 based on this reasoning. Additionally, the restriction was intended to stop raw lithium from being smuggled across the nation’s porous borders with neighbouring South Africa and Mozambique.

Nevertheless, the country’s economy has not really benefited from the lithium business for last two years despite the ban. Issues like ongoing power outages, shortages of foreign exchange, and ambiguous policies have hindered the country’s ability to grow its lithium industry. A lengthy energy shortage has resulted in six to twelve-hour daily outages at the nation’s mines. Furthermore, Zimbabwe is not eligible to receive new funding from multilateral development banks, which might be used to increase access to power and establish a more stable foundation for energy generation, due to its enormous $17 billion debt and arrears to the IMF and World Bank. Last but not least, lithium prices in China, the top consumer of lithium globally, were on a downtrend throughout the year, severely impacting the economy of Zimbabwe.

Today, Zimbabwe is in severe need of fresh investments to move forward. Since investors simply relocated their operations elsewhere, the export ban worsened the situation. Since the embargo, raw lithium inventories have increased, and prices have decreased as some mining companies have hurried to construct facilities to turn raw lithium into concentrates for export. Therefore, out of desperation, Zimbabwe would likely give over its lithium to China sooner rather than later unless other interested parties intervene.

China, the world’s largest producer of lithium batteries and refiner of lithium, has already made significant investments in Zimbabwe’s mining sector. A few years back, China declared a staggering USD 2.79 billion investment plan in Zimbabwe’s lithium mining industry. Numerous Chinese mining corporations exist in Zimbabwe, including Sinomine Resource Group, Chengxin Lithium Group, Yahua Group, Zhejiang Huayou Cobalt, and Canmax Technologies.

The cost of building the lithium economy infrastructure is immense, and Zimbabwe requires a lot of external investors to develop its domestic local lithium industry. The most significant obstacle to Zimbabwe’s ability to borrow money and attract investment is the US sanctions, which have existed since 2001. The Minister of Finance and Economic Development for Zimbabwe asserted last year that the sanctions imposed by the West had caused the nation to lose almost $42 billion in revenue. In the absence of adequate government capacity, the government is facing a tremendous challenge in trying to revive Zimbabwe’s faltering economy.

As the US seeks to secure its production of green energy by severing China from the lithium value chain, it is attempting to confront China in Zimbabwe with a multifaceted strategy. Ironically, these US sanctions pushed Zimbabwe closer to China. Indeed, China was probably the only nation that continued investing in Zimbabwe despite the sanctions. In fact, compared to Western development and commercial banks, Chinese financiers are significantly more willing to engage in high-risk ventures. In the first half of 2023, the Zimbabwe Investment Development Agency reportedly received 160 lithium investment applications from Chinese investors, compared to just five from US investors.

After realising the geopolitical ramifications of its prolonged disregard for the lithium value chain and its susceptibility as a result of China’s excessive influence, the US government is finally prepared to alter its approach. The USA lifted sanctions against Zimbabwe in March 2024. Instead, it enforced the Global Magnitsky Act of 2016, which gave the United States the authority to sanction eight particular Zimbabwean people in response to claims of corruption and human rights violations. With this, the US or other Western nations would have no restrictions in investing in Zimbabwe.

Lastly, Zimbabwe lacks the cross-border logistics and infrastructure needed to connect to a port because it is landlocked. The USA has declared plans to build the Lobito Corridor, a railroad that will link the Lobito port in Angola with Zambia and the Democratic Republic of the Congo. The USA might think of extending the corridor and connecting Harare to it.

Lithium exports might assist Zimbabwe in breaking free from its reputation as a pariah state, considering how tightly-knit the world’s lithium supply networks are. However, fierce competition is underway for the nation’s essential minerals, which China is now leading. The main strategy the Chinese government employed was establishing and preserving monopolies and monopsonies. Another means of coercion is market manipulation. Due to its superior supply network, China has the market strength to stifle rivals.

Access to secondary producers and international buyers is necessary for lithium processors. China is now well ahead when it comes to turning metal into battery raw materials and controlling the whole value chain. While this jubilant rhetoric is going on, China is steadily increasing the number of lithium projects in its portfolio across the nation solidifying its status as an important trading and financial partner. Zimbabwe can gain from this competition if the US becomes more interested in its lithium. However, everything will depend on how willing the US is to commit resources amid China’s strategic rivalry.