PROSPECT Lithium Zimbabwe (PLZ), a unit of Australia Stock Exchange-listed Prospect Resources Plc, has applied for special economic zone status (SEZ) for its multi-million dollar Arcadia Lithium project near Harare that was commissioned by President Emerson Mnangagwa, yesterday.
President Mnangagwa told delegates at the official ground-breaking ceremony that lithium was one sub-sector targeted to leapfrog Zimbabwe’s industrial and economic development to middle income status by 2030.
Several senior Government officials attended the ceremony, among them Vice President, Constantino Chiwenga, Mines and Mining Development Minister Winston Chitando, Transport Minister Joel Biggie Matiza, Chief Secretary to the President and Cabinet Misheck Sibanda, Deputy Chief Secretary to the President and Cabinet (Presidential Communications) George Charamba as well as many senior diplomats including from China and Australia.
Prospect’s Arcadia project will hoist Zimbabwe, currently the world’s 5th largest lithium producer with only a single mine operating, to a much higher production ranking and earn the country hundreds of millions in annual foreign revenue and other value chain activities export earnings.
This comes as lithium has gained global prominence as the most valuable mineral for the future given its use in a number of areas including medicines and ceramics, but more importantly manufacture of electric vehicle batteries. This also comes amid growing global push for green energies.
Phase 1 of the Arcadia lithium project, expected to earn Zimbabwe $3 billion over a 12 year life of mine (LOM), is anticipated to go into full production in the next 12 to 14 months. This will follow initial investment of $165 million. Seventy percent of initial lithium was sold upfront.
Half the funding required for the project has already been raised while processes to secure the balance of the required capital outlay, which comes on the back of the successful completion of a definitive feasibility study, is in progress.
“We are hoping that not in so long a time to come we will have our SEZ licence in place and some of the SEZ senior management were actually at this function (ground-breaking ceremony yesterday) here,” Mr Chimbodza said.
SEZ, Mr Chimbodza said, was important for Zimbabwe given the cocktail of economic and business incentives awarded to companies in such targeted specific export oriented sectors, industries or sub-sectors.
“It (SEZ application) is mainly to do with incentives that Government has put in place. Special Economic Zones are designed by their nature to bring in incentives in terms of tax holidays, work permits if you are going to need any external workforce, but importantly SEZs are specifically for export-oriented products.
“So, it is a sign of approval for our investing community for Zimbabwe to start establishing and operationalising these special economic zones because they bring in a lot of these issues (incentives) that make a lot of business sense from a commercial point of view,” he said.
Minister Chitando said the Arcadia lithium project, which has potential to become Africa’s largest hard rock lithium mine, will produce petalite and spodumene.
“Arcadia is deemed to be the largest hard rock lithium project in Africa,” he said.
“In terms of production, Zimbabwe in 2017 was the 5th largest (lithium) producer in the world. This principally comes from Bikita Minerals (Masvingo), which produces petalite. Arcadia is deemed to produce two (types of lithium), petalite and spodumene (varieties of lithium).”
Currently only Bikita Minerals is producing but there are four other promising projects under development namely Kamativi, Zulu in Bulawayo and Lutope (Hwange).
To support development of this strategically important sub-sector Minister Chitando said together with the miners he was working to develop a lithium development policy.
Based on the proposed 2,4 million tonnes per annum mining and processing operation, the DFS indicates that Arcadia will be a strong financial, high margin project with current forecast Life Of Mine (LOM) revenue of $2,93 billion and average annual EBITDA of $106 million over an estimated 12-year mine life.