Zimbabwe’s recent tightening of export restrictions on lithium has placed the country at the centre of a broader global shift. As demand for critical minerals accelerates, governments are looking for ways to retain more value locally rather than exporting raw materials.
“Zimbabwe is a clear example of this trend, but it is not unique,” says Michael Hewson, Director of Graphene Economics, specialist African transfer pricing firm. “Across Africa and other resource-rich regions, similar policies are emerging as countries seek to move up the value chain. What is less often discussed is how these shifts play out in practice, particularly from a tax and transfer pricing (TP) perspective.”
Zimbabwe’s current position did not emerge overnight, although the ban on lithium concentrates was previously expected to only come into effect in 2027. In 2022, the government introduced a ban on the export of unprocessed lithium ore. Subsequent measures have progressively tightened these controls, reinforcing the expectation that value-added processing should take place within the country. In late February 2026, however, Zimbabwe suspended exports of all raw minerals and lithium concentrates with immediate effect after the government alleged malpractices and leakages.
While Hewson notes this suspension came as a shock, the government’s intent had been clear: limit raw exports, encourage local beneficiation, and capture a greater share of the downstream value associated with lithium, particularly in the context of the global energy transition.
“Export bans are nothing new. Botswana has long pushed for local diamond cutting and polishing. Outside of Africa, Indonesia has taken a similar approach with nickel, restricting exports to force investment into domestic processing,” says Hewson. “In each case, the objective is the same: shift from being a supplier of raw materials to a participant in higher-value segments of the supply chain. The policy logic is straightforward. But the implementation is less so. From a business perspective, there are additional complexities that come into play.”
Disruption before development
Policies can move faster than operations. That gap is where the first set of challenges emerges. As Hewson notes, companies cannot simply switch from exporting raw lithium to operating beneficiation facilities overnight. “These are capital-intensive, technically complex operations that require time, expertise and infrastructure to establish,” he says. “In the short term, the result is often disruption. Companies may find themselves unable to export under the new rules, while not yet being able to process locally. Revenue can stall, costs increase, and operations may need to pause or adjust.”
Infrastructure constraints add another layer. Reliable power supply, for example, is critical for processing operations but not always guaranteed. Skills and technology may need to be imported. All of this creates a timing mismatch between policy ambition and operational readiness.
While this is complex from an operational perspective, Hewson says this complexity also significantly affects tax outcomes.
New structures, new transactions, new scrutiny
“As companies respond to new policies, their operating models evolve,” says Hewson. “For example, in Zimbabwe, where a business may previously have extracted and exported lithium ore, it may now need to establish or invest in a local processing entity. This brings new intercompany transactions into play: funding arrangements, technical and management services, licensing of processing technology, and the onward sale of beneficiated product within the group. Each of these transactions must be priced. Each introduces transfer pricing risk.”
As Graphene Economics has observed more broadly, cross-border tax is increasingly being recognised as a core business risk, not just a compliance exercise. Policy-driven changes like Zimbabwe’s only accelerate that shift.
When regulation distorts pricing
Hewson says that one of the more complex challenges arises where regulation directly constrains pricing.
“In Zimbabwe, limits on management or technical service fees, often capped at a percentage of revenue, can restrict what companies are able to charge for genuine support services,” he says. “Additional limits on deductibility further complicate the picture.”
In a typical commercial setting, early-stage operations would require significant technical and managerial input from the broader group. Under an arm’s length framework, that support would be priced accordingly.
But where regulatory caps apply, the price that can be charged may not reflect the underlying economic value of the service.
This creates a fundamental tension. The business reality points in one direction. The regulatory framework pulls in another.
As Hewson points out, the issue is not simply one of getting the pricing wrong. It is that the pricing is being constrained externally. In these cases, transfer pricing becomes less about setting the “right” price and more about explaining why the outcome looks the way it does.
Losses, timing and defensibility
These dynamics are particularly visible in the early stages of transition. For example, a newly established lithium beneficiation entity in Zimbabwe may incur losses. This could be due to start-up costs, delays in reaching full production, or the broader disruption caused by the policy shift.
“From a commercial perspective, this may be entirely reasonable. From a tax perspective, it can raise red flags,” says Hewson. “Revenue authorities in other jurisdictions may question whether those losses reflect genuine economic conditions or inappropriate pricing. The burden then falls on the taxpayer to demonstrate that the outcomes are driven by external constraints rather than transfer pricing misalignment.”
Documentation becomes all important. “Companies need to clearly link financial results to the underlying facts: policy changes, timing delays, infrastructure constraints and the realities of establishing new operations,” Hewson says.
Pricing a new value chain
As beneficiation capacity comes online, a different set of questions emerges. What is the appropriate price for processed lithium compared to raw ore? How should the value uplift be allocated across the group? Which entity is performing the key functions, assuming the risks and deploying the critical assets?
“These are not straightforward questions, particularly in markets where comparable data is limited and the industry itself is evolving rapidly,” says Hewson. “The risk of tax disputes increases. So does the importance of a well-articulated transfer pricing position, grounded in the commercial reality of the business.”
From compliance to strategy
Zimbabwe’s lithium policy provides a clear illustration of how government intervention can reshape not just operations, but the entire tax profile of a business.
“As more countries seek to capture greater value from their natural resources, similar challenges are likely to arise elsewhere,” says Hewson. “For multinationals, that means that transfer pricing cannot be treated as an afterthought. It needs to be considered alongside operational and investment decisions from the outset.”
