Kuvimba grapples with commodity volatility, funding constraints and operational headwinds

HARARE – Kuvimba Mining House (KMH), one of Zimbabwe’s largest diversified mining groups and member of Mutapa Investment Fund, faced a complex set of challenges in 2024 as volatile global commodity markets, weak battery mineral prices, logistical bottlenecks and legacy operational issues weighed on parts of its portfolio.

The company plans to raise approximately US$950 million to scale operations across gold, lithium, platinum and chrome.

According to the Mutapa Investment Fund’s 2024 annual report, KMH operated in an increasingly uncertain global commodities environment marked by geopolitical tensions, shifting demand patterns and supply chain disruptions. While strong gold prices provided some stability, other key segments of the group’s operations came under significant pressure.

One of the most pronounced challenges emerged in the Energy Minerals cluster, particularly lithium. Global lithium carbonate prices declined by 22 percent in 2024 due to oversupply, largely from China, and slower-than-expected electric vehicle adoption. The price slump negatively affected local lithium production levels and revenue realisations, constraining the near-term contribution of lithium assets to KMH’s performance.

“The collapse in lithium prices adversely affected local production levels and revenue realisations; however, KMH continued to advance strategic negotiations for a consortium based special purpose vehicle to develop and process lithium on Sandawana Block A,” the Fund noted.

However, a research done by the Market Index, seen by Nehanda Radio, points to the reasons behind the recovery in lithium prices.

The research firstly cited the rapid growth in battery energy storage (BESS) demand.

It noted that lithium demand is no longer driven mainly by electric vehicles. Battery energy storage systems for grids and renewables are becoming a major, more stable source of demand. Investment banks now expect BESS to account for a large share of future lithium consumption, tightening the market and supporting higher prices in a more durable way than past EV-led cycles.

The report secondly noted improved supply discipline, especially in China. It said that the destructive price war that defined the downturn is easing. Chinese policy measures, including higher royalties and an “anti-involution” stance, are raising the cost floor for high-cost producers and discouraging volume-at-any-cost production.

This, according to the research, is forcing supply rationalisation, reducing excess output, and allowing prices to recover toward sustainable levels.

The research finally noted that after three years of falling prices, lithium has stopped making new lows and has begun to rise consistently. This has shifted investor and industry psychology.

Rising prices are attracting capital back into the sector, encouraging restocking and delayed supply, and reinforcing momentum. As confidence returns, the Market Index noted, the market is increasingly pricing in the early stages of a new lithium cycle rather than a temporary bounce.

According to Mutapa Investment Fund’s annual report, Nickel operations remained under strain. Bindura Nickel Corporation, a key asset within the group, stayed under administration throughout the period.

Persistently low global nickel prices, averaging below levels required to support new investment, combined with longstanding operational and financial challenges, continued to undermine the company’s ability to generate sustainable cash flows.

In the Platinum Group Metals (PGMs) cluster, KMH’s flagship Darwendale project remained under care and maintenance. Despite a global supply deficit in platinum, the project’s development was stalled by funding constraints, with the company still engaged in discussions with potential investors and financiers to unlock capital for project revival.

The Bulk Commodities cluster faced its own difficulties, largely driven by external cost pressures and infrastructure constraints. Rising global shipping rates eroded the competitiveness of Zimbabwean mineral exports, while power supply disruptions and inconsistent feedstock availability limited production at Zimbabwe Alloys. These challenges prevented the operation from fully benefiting from available market opportunities.

Operational inefficiencies linked to energy security also cut across several assets. Recurring power outages increased costs and disrupted production schedules, highlighting the broader vulnerability of mining operations to infrastructure weaknesses.

Although gold remained a strong performer, helping offset some of the pressures elsewhere in the portfolio, the report noted that KMH continued to contend with the need for substantial capital mobilisation.