The African nation has suspended lithium exports from its territory, triggering an increase in prices.
By Pablo San Martín
Lithium prices in China rose by more than 6% following news from Zimbabwe, where the government decided to suspend exports of the metal. The country accounts for roughly 8% to 10% of global lithium carbonate equivalent (LCE) supply and is an important supplier to China.
The suspension reflects the government’s objective of encouraging companies to establish domestic processing operations. This was confirmed by the Minister of Mines and Mining Development, Polite Kambamura, who stated that the measure seeks to “promote local beneficiation and maximize value retention within the country.”
Following the announcement, companies involved in lithium extraction and exports also benefited. For example, SQM’s Series B shares rose 4.59%, becoming one of the drivers behind the IPSA index, which climbed again above 11,000 points. Meanwhile, on the New York Stock Exchange, Albemarle shares increased by 4.84%.
One of the questions raised in the local market after Zimbabwe’s announcement is whether Chile could benefit from the reduction in global lithium supply. While experts generally agree that there may be some short-term upside, several note that Argentina could ultimately capture a larger share of the opportunity if Zimbabwe’s exports remain suspended for an extended period.
How Could Chile Benefit?
Andrés González, Head of Mining Industry Analysis at Plusmining, notes that the impact for Chile would be positive but limited.He explains that the main benefit would come through higher prices rather than increased export volumes.
“The immediate suspension of exports creates a supply shock in a market that was already showing declining inventories and a recovery in demand, particularly from the battery sector in China and Europe.”
“In the short term, the primary effect is upward pressure on prices. In fact, the Chinese market reacted strongly in lithium carbonate futures. If the restriction persists for several months, it could generate an additional supply deficit by 2026.”
According to González, for Chile the suspension of Zimbabwean exports would translate into higher export prices for lithium carbonate and lithium hydroxide, improved operating margins for producers such as SQM and Albemarle, and higher fiscal revenues.
However, he also notes an important distinction: “Zimbabwe is not a direct equivalent competitor to Chile, as it primarily produces hard-rock lithium concentrate, whereas Chile mainly exports refined lithium products derived from brines.”
Juan Ignacio Guzmán, CEO of GEM Mining Consulting, also emphasizes the price impact. “What could be the benefit for Chile?” he asks. And answers: “Obviously, higher prices.”
“Zimbabwe is a relatively new and marginal player in the market. However, when production is closely balanced with demand, even small disruptions in supply can have a significant effect on prices.”
A Missed Opportunity?
Julietta Zamora, professor at the Faculty of Engineering at Universidad del Desarrollo, argues that the situation highlights a structural opportunity that Chile has not fully capitalized on.
“While Argentina has a broad and active pipeline of lithium projects at various stages of development, Chile continues to rely almost exclusively on a single producing salar, limiting its ability to respond and allowing other regional actors to capture a significant portion of this opportunity.”
“The positive effect for Chile does exist, but it is limited and contingent. It will depend both on the duration of Zimbabwe’s policy and, more importantly, on Chile’s strategic capacity to capture this window of opportunity—something that has so far been constrained by structural, regulatory, and project-portfolio limitations.”
Guzmán adds an important nuance. In the short term, Chile would likely benefit more than Argentina simply because its current production levels are higher. However, in the medium to long term, if Zimbabwe were to face restrictions affecting future production: “Argentina operates within a more flexible market framework with fewer regulatory constraints than Chile. As a result, it could attract new investment, new mines, or expansions more easily.”
“In the very short term,” he concludes, “Chile would likely benefit more simply due to its existing production scale.”
Source: El Mercurio