Exports of lithium ore and unpurified lithium salts have been banned unless the producer can prove there are special circumstances, and even then exporters would have to pay the special 15 percent export tax, where the normal exporter of purified tradable product would be exempted.
The ban, except for ore samples being sent for analysis, came into effect on Monday with the gazetting by Mines and Mining Development Minister Winston Chitando of Statutory Instrument 213 of 2022, the Base Minerals Export Control (Lithium Bearing Ores and Unbeneficiated Lithium) Order, 2022.
The move implements the general policy of the Second Republic that mineral exports should be refined or beneficiated within Zimbabwe to the standard levels required for international trade, with this processing adding value to the finite mineral resources and ensuring that the value addition is done in Zimbabwe, creating jobs as well as making the export a lot more valuable.
While there is a very small amount of trade in lithium metal, this is a highly reactive element that is very dangerous to store and transport; for example it bursts into flame on contact with water or excessive moisture.
So most international trade is in lithium carbonate and increasingly in lithium hydroxide now preferred by battery manufacturers, since these are the salts that battery manufacturers use as their feedstock. There is also trade in the chloride salt, since this is what brine processors produce.
The London Metal Exchange has now opened trading in lithium hydroxide but not in the metal. The two commonly traded and safe salts have to be 99,5 percent pure to meet the delivery standards of lithium users. Officiating at the US$67 million new Central Shaft Expansion Project and the 12,2 megawatt solar plant at Blanket Mine in Gwanda recently, President Mnangagwa indicated that the era of reliance on exporting primary products was over.
“We cannot as a country continue to be exporting primary products, including concentrates and ores. Our people must fully enjoy the benefits of ‘moving up the value chains,” he said. “In line with Vision 2030 and NDS1, greater efforts should be made towards value addition and beneficiation of our mineral resources, and primary products.”
In terms of the new regulations, ‘unbeneficiated lithium’ means any lithium in whatever form that has not undergone processing to an extent that would exempt it from the payment of the 15 percent export tax under section 12B of the Value Added Tax Act .
The actual lithium products and their level of purity to allow unrestricted export are set under tax codes, since the export ban cuts in when purity is below the level that ends export taxes. Those levels can be adjusted in the tax code.
“No lithium bearing ores, or unbeneficiated lithium whatsoever, shall be exported from Zimbabwe to another country except under written permit of the Minister,” reads the regulations. The only near automatic exemptions are for samples of lithium bearing ore or unbeneficiated lithium for assaying outside Zimbabwe, and even these need the permit. The actual tradable production needs to be purified within Zimbabwe.
However, the regulations said permission may also be granted to a miner or exporter of lithium upon production of written proof satisfactory to the Minister that there are exceptional circumstances justifying the export in question.
The minister said another waiver may be on condition that the lithium bearing ores or unbeneficiated lithium in question have been valued in terms of the Value Added Tax Act for purposes of payment of the export tax on unbeneficiated lithium.
“That is to say the market value thereof on the date of exportation has been determined by reference to a reputable metals exchange or its value is reflected on any document required to be delivered in terms of the Customs and Excise Act for its exportation under that Act,” he said.
The Base Minerals Export Control Act allows the new order to come into effect notwithstanding anything inconsistent with other law or any trade or customs agreement to which Zimbabwe is a party.
The same Act, which governs export bans and permits, means that anyone breaching the order is liable to a fine or imprisonment. The fine is level 9 or twice the value of the base minerals, and the jail term can be as long as two years.
The massive growth of mining investments under the Second Republic has been creating more job opportunities across the country while the steady increase in precious minerals output is expected to continue enhancing economic stability. -state media