Founder: Zimbabwe's lithium export policy is affecting market expectations, focusing on sector investment opportunities in the second quarter.

Founder released a research report stating that the Zimbabwean government has proposed 11 lifting conditions to promote the extension of the lithium industry. The key requirements include building a lithium sulfate factory by 2027 and imposing a 10% export tax and implementing export quota management. Currently, only a few companies have the relevant capacity, making it difficult to meet the standards on time, creating a space for export restoration games. Paying attention to the impact of supply-side events, the investment opportunities brought by the maintenance of high lithium carbonate prices and upward breakthroughs. The main points of Founder are as follows: Zimbabwe's promotion of the extension of the lithium industry brings variables to lithium resource supply In April 2026, the Zimbabwean government issued a notice to seven lithium resource producers in the country regarding the conditions for the resumption of lithium ore exports. Since March 2026, the Zimbabwean government has banned the export of lithium ores for over a month. This government notice marks the beginning of the negotiation period for the resumption of lithium ore exports in Zimbabwe. Various conditions for lifting the ban The 11 lifting conditions proposed by the Zimbabwean government cover ore selection facilities, construction of lithium sulfate factories, lithium ore export taxes, lithium ore export quotas, and various other requirements related to enterprise management and information disclosure. The bank believes that the policy aims to encourage foreign investment in Zimbabwe and extend the downstream industrial chain of lithium ores, thereby keeping more of the benefits of lithium industry development in the local area. However, this policy objective will also lead to an increase in the cost of local lithium resource development, lengthening the investment payback period, and bringing uncertainty to lithium carbonate resource supply. Construction of lithium sulfate factories on time is difficult, with further negotiation space remaining Among the specific lifting conditions, the construction of lithium sulfate factories is a part that has a high level of difficulty but is highly valued by the Zimbabwean government. This requirement was first proposed in June 2025, and since then, the government has continued to emphasize the need for lithium ore companies to extend their industrial layout in Zimbabwe. The Zimbabwean government requires companies to submit written commitments, clearly stating the time schedule for building the lithium sulfate factories, with the factories needing to be completed by January 1, 2027. Furthermore, companies need to submit monthly progress reports to a special committee established by the Zimbabwean government. Currently, Zhejiang Huayou Cobalt has completed a 50,000-ton lithium sulfate project in the area. The remaining companies' lithium sulfate factories are either in the planning or construction stages. The bank believes that considering a reasonable project construction period, the possibility of Zimbabwean companies completing all lithium ore production corresponding to lithium sulfate capacity construction by early 2027 is low. This means that negotiations between companies and the government may continue, potentially resulting in the release of new lithium ore production capacity in Zimbabwe falling short of expectations. Increased export quota management to regulate lithium ore export procedures One of the lifting conditions proposes a 10% export tax on all lithium ore exports, and the government will allocate approved lithium ore export quotas to production companies. In 2025, Zimbabwe levied a 5% export tax on lithium ore, with an increase in export tax rates starting in 2026. In terms of export quotas, considering that Zimbabwe does not have the pricing power in the global lithium resource supply and that in the past, exporting lithium ores in Zimbabwe required government permission, the bank believes that the export quotas should be a policy tool to support the construction of lithium sulfate factories. That is, companies that have ore selection facilities and have made clear commitments to build lithium sulfate factories, will be granted lithium ore export quotas by the government. The bank believes that the government's introduction of export quotas is to regulate the process of lithium ore exports, but the quota system itself also brings uncertainty to Zimbabwe's lithium resource supply. Lithium ore inventory helps smooth the short-term impact of export bans, but the disturbance caused by resource nationalism policies cannot be ignored The bank believes that if Zimbabwe resumes lithium ore exports in April, considering the lithium ore inventory hoarded by various companies and traders at ports, the impact on domestic raw material supply can be smoothed out. However, considering the already low lithium salt inventory levels domestically, if the resumption of lithium ore exports in Zimbabwe is later than expected, the impact on lithium supply in the second quarter will still be evident. As there is uncertainty in the construction of lithium sulfate factories and quota management, the bank believes that there is room for a downward revision in global lithium resource supply increments in 2026. Gulf conflict leads to high oil prices, increasing the strategic value of lithium batteries and new energy Since the blockade of the Strait of Hormuz, global oil prices have surged. Many countries, including Australia, are facing shortages of gasoline and diesel reserves. The bank believes that this will also accelerate countries' transition to new energy sources to reduce their dependence on oil, thus benefiting upstream energy metals like lithium carbonate. Investment recommendations Focus on high-quality resource companies in the sector such as Ganfeng Lithium Group, Tianqi Lithium Corporation, Qinghai Yanhu Industry, Yongxing Special Materials Technology, Dazhong Mining, Guocheng Mining, among others. Also pay attention to the value return of Zimbabwe-related lithium resource companies after the resumption of lithium ore exports, such as Sinomine Resource Group, Zhejiang Huayou Cobalt, Chengxin Lithium Group, Sichuan Yahua Industrial Group. Risk warning Slower-than-expected demand growth under high lithium prices; faster-than-expected progress in global lithium resource capacity construction; escalated intensity of the Gulf conflict leading to systemic risks.