According to Reuters, Huayou Cobalt is under regulatory pressure from Zimbabwe to produce battery-grade lithium locally within five years.
Huayou Cobalt had previously said it was "not feasible" to produce battery-grade lithium in Zimbabwe because of shortages of electricity and other key raw materials.
Huayou Cobalt bought the Arcadia lithium mine outside Harare for $422 million earlier this year and has announced plans to spend $300 million.
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As a condition of approving the deal, the COMPETITION and Customs Commission stipulated that battery-grade lithium must be produced within five years.
"Approval of the transaction is conditional on the combined entity, its subsidiaries, affiliates and successors to ownership undertaking to produce battery-grade lithium in Zimbabwe within five years of receiving the decision," said a June 22 notice from the commission seen by Reuters.
This is not in line with huayou cobalt's stated plans.
Huayou Cobalt plans to build only a concentrator to process the ore, rather than a converter for further processing and production of battery-grade lithium carbonate.
When Huayou Cobalt announced its arcadia investment plan in May, it said: "To produce one tonne of battery-grade lithium carbonate, 2,800 KWH of green renewable energy, 500-600 cubic metres of natural gas, 2.2 tonnes of concentrated sulphuric acid (98.5 per cent), 2 tonnes of primary sodium carbonate, 20 kilograms of primary sodium hydroxide, 4 tonnes of heavy calcium powder and 1.6 tonnes of food-grade carbon dioxide are required, which are in chronic shortage in Africa, The cost of imports would be huge and unbearable."
Paul Chimbodza, a mining analyst, said Zimbabwe needed to temper its "beautiful" expectations for batteries as it imposed a 5 per cent tax on lithium exports to promote local processing. The young industry needs to learn to walk before it can run.
