Online Reporter
Dr Michael Musanzikwa
The recent ban on lithium concentrates by the Government of Zimbabwe ushered in a new era of future resources and green revolution for the 21st century.
The expectation is that Zimbabwe will have refineries to value-add lithium into various products.
Generally, the ban may cause short-term market volatility whilst leading to structural shifts in the global lithium supply chains in the long term, with more vertically integrated and locally refined products emerging from Zimbabwe.
Consequently, this reminds business stakeholders, particularly in the telecommunications, automobile and renewable energy sector, of the need to align their strategic transformational objectives by utilising the procurement function through leveraging the abundance of the critical resource.
Lithium is a critical component in the high-growing energy transition sector.
The main reason Zimbabwe took this decisive step on lithium was to control and move up the global value chain.
Lithium refining is complex.
It requires substantial capital, reliable energy supply and skilled human resource.
Bearing in mind that about 70 percent of the capital investment by organisations is spent through procurement, it is expected that positive returns for shareholder value and continuity should be realised.
Therefore, for organisations going to be involved in the value chain process, it is critical that strategic decisions critical in this transformational journey of the new dawn must be employed from the onset so as to avoid misleading organisations through non-value-based supply chain procurements in the lithium industry.
Zimbabwe already has companies such as Bikita Minerals and Arcadia Lithium Mine that are involved in the extraction of lithium and are working towards establishing refining plants.
More investors in the sector are likely to join the bandwagon, regardless of their shareholding structure. So, procurement is a critical game-changer in the supply chain value-addition process.
Objective
Firstly, it is important to outline precisely the objective of the organisation, especially on why it is engaging in the lithium business, since there are various types of lithium ores for the mineral beneficiation processes.
The technical aspect — issues of quality, its impact on the local market and beyond, as well as how it is going to address challenging green issues — must be clearly defined.
The organisation has to correctly identify the value chain partner or partners in lithium industry in terms of long-term supply, quality of the raw lithium and other issues of sustainability.
For example, if the final production of goods such as batteries is to be achieved, the supply chain of the material and other enablers such as power have to be seamless, and this is facilitated by the procurement function.
The contribution of the supply chain to the lithium industry must be viewed from the employment of its procurement function on the allocation of the financial resource, which should not show or allow structural imbalances of constraining delivery of operational services towards the intended objective.
Procurement must strategically be in a position to advise how spending of the budget should be aligned with the strategic transformational objectives of lithium value addition.
For example, investment in capital equipment, digital core and systems transformation, strategic enablers such as human resources and change, as well as operational support systems like vehicles, fuel and furniture, must be prioritised accordingly.
This is because high-value spending in value addition must be allowed, but only when it brings positive transformation in the realisation of the final lithium by-product, in line with strategic objectives.
Conversely, this strategic outlook by Zimbabwe resonates well with the objectives of the newly formed continental body, Africa Supply Chain Confederation (ASCON), which has the following key objectives:
- To unify, strengthen and professionalise supply chain practices across the African continent
- Seizing opportunities: To leverage global economic opportunities that demand resilient, efficient and innovative supply chains
- Addressing challenges: To tackle the distinct supply chain challenges specific to Africa through a coordinated strategy
- Economic growth: To propel economic growth across the continent by advancing the supply chain field
- Driving industrialisation: To use a unified voice to support and promote the “Buy Africa” approach
Therefore, the Zimbabwean Government is in the right direction to shift from a volume-driven export model to a beneficiation-led approach by producing higher-value lithium derivatives like lithium sulphate, lithium carbonate and lithium hydroxide within Zimbabwe.
For Zimbabwe to benefit and impact on the African continent and beyond, it has to appreciate and professionalise the supply chain process in the lithium industry, in line with the continental and global standards set by organisations such as ASCON.
Subsequently, it is fundamental for organisations involved in the lithium value chain to recognise the adoption of procurement as a critical invisible instrument in the allocation of the scarce financial resource based on correct and sound priorities. High investment values in the lithium industry can only make sense when big money is allowed to procure transformation for the value-added products so as to obtain value for money and change lives of the citizenry through increased economic growth.
Dr Michael Musanzikwa is the chief director (procurement and disposal of public assets) in the Office of the President and Cabinet.
