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China’s changing role in Africa’s green economy

Across most of the continent, minerals are exported straight after extraction without local value-add.

Across most of the continent, minerals are exported straight after extraction without local value-add. 

  • But lithium mining in Zimbabwe is increasingly bucking that process.

First step: Chinese companies have started turning Zimbabwean lithium into concentrate on site before export, creating local jobs and expertise. 

Why it matters: This marks a change for China’s investment in Africa as well as a significant step towards green African industrialisation. 

  • Until now, much of the economic value had accrued in China. 

  • But Beijing’s new external strategy targets batteries, vehicles and solar panels rather than furniture, clothing and home appliances.

Join the queue: Multiple investments are under way, accelerating the trend.

  • Zhejiang Huayou has opened a $300-million lithium concentrator with an annual capacity of 450,000 metric tons at the Arcadia mine acquired for $422 million.

  • Eagle Canyon and Pacific Goal plan a $13 billion ”mine-to-energy industrial park” to produce lithium-ion batteries in Zimbabwe.

  • Sinomine bought Bikita mine to produce 300,000 metric tons of spodumene concentrate.

  • Chengxin Lithium Group commissioned a 300,000 metric ton per year lithium concentrator at Sabi Star mine in eastern Zimbabwe.

  • In DRC, Chinese firms own or have stakes in 15 of the 19 cobalt producing mines. And they’re not done in Zimbabwe.

The driver: Hard economic calculations are behind these investments. 

  • Global demand for minerals is skyrocketing due to growing battery use in vehicles.

  • Africa has a lot of the relevant minerals: Zimbabwe is the largest lithium miner, and DRC is the largest cobalt producer.

  • China is a leader in battery technology, controlling much of the supply chain.

The crux: Many African countries have banned unprocessed mineral exports – or are talking about it – to boost industrialisation. 

  • But Zimbabwe is struggling with international sanctions due to human rights violations… which China chooses to sidestep. 

  • China also employs looser loan and financing regimes as well as lower (or no) ESG standards

Strategic plans: China started two decades ago investing and buying up mining and manufacturing companies related to electric vehicles, including Western ones in Africa. Today it is dominant.

  • The 1998 purchase of an 85% stake in Zambia’s Chambishi copper mine for $20 million was one of China’s earliest overseas mining investments.

  • However, Chinese overseas lenders and investors are becoming more careful due to bad debts, domestic needs and international pressure.  

Trojan worries: Critics have warned against becoming overly reliant on China. 

  • Most Chinese investors are private companies acting on commercial motives. 

  • However, all sizeable Chinese firms have Communist Party cells.

The rest: China is not alone in taking an interest in African minerals and green industrialisation. 

  • The United States signed deals with Congo and Zambia in December, including to develop a local EV value chain. 

  • An American company agreed to develop a lithium-ion battery supply chain in Ghana. 

Bottom line: Africa is well positioned to benefit. But countless obstacles remain. 

  • Moving from basic processing to full production requires better regulation and infrastructure.

  • Export bans fail to prevent the smuggling of raw materials.