Africa-Press – Rwanda. It’s time for Africa to build its own gigafactories and carve its niche in global lithium-ion battery production.
In June, Europe’s leading battery startup Northvolt raised $1bn for a battery gigafactory in Sweden.
The project is part of a larger attempt by Europe to develop an industrial policy around battery production, which could add €250bn ($280bn) to the EU economy by 2025.
But Europe is not the only player in the space: American and Asian automakers like Tesla and Toyota are building battery gigafactories in a bid to dominate the electric vehicle battery market.
Africa needs to follow the US and Europe in adopting a forward-thinking policy on battery value-addition Yet, one region is absent in the global battery production race.
As the key producer of battery minerals, Africa is a lynchpin in battery supply chains. But African countries have fallen into a trap of exporting raw minerals and have missed out on opportunities for value-added manufacturing.
Africa needs to follow the US and Europe in adopting a forward-thinking policy on battery value-addition. By tapping into the potential of this multibillion-dollar industry, African countries must prioritise battery production to generate additional revenue streams for their economies.
The battery market is booming. The global transition towards cleaner fuels has spurred the demand for electric vehicles and investment in battery-powered storage systems.
Lithium-ion batteries have become the dominant storage technology due to their high energy density, and are increasingly used in the power and transport industries.
The paradigm shift towards green power for utilities and automakers has contributed to mass battery production and adoption, pushing down battery prices. Africa is home to approximately 30% of the world’s mineral reserves, many of which are mined as raw materials for batteries.
In 2018, Zimbabwe and Namibia were among the top 10 countries for global lithium production, with Zimbabwe alone holding 11m tonnes of lithium ore in its Bikita mines.
Lithium, dubbed as the world’s hottest commodity, is a crucial lithium-ore battery component. The high demand for lithium-ore batteries and the surge in popularity of electric vehicles ensures that lithium will remain an indispensable mineral resource to the energy and auto industries.
Beyond lithium, other battery metals include cobalt, manganese, and graphite. While this mineral abundance emphasises Africa’s vital role in the battery market, a significant lack of investment in battery production across Africa persists. This contrasts with the sweeping global investment into battery gigafactories.
China, for instance, remains the dominant player in all stages of the global battery supply chain, with over 90 battery manufacturers and several gigafactories.
The concentration of supply in China poses supply-chain constraints due to the potential for changes in government policy or future geopolitical instability, such as the ongoing US-China trade spat.
Such disruptions can create supply gaps in the battery market, which could in turn lead to volatile commodity prices or price uncertainty. Africa needs to recognise and tackle this problem by injecting more capital into its mineral production and refining capacity.
African countries can now take advantage of potential disruptions in global battery flows With the promise of the ratified African Continental Free Trade Area (AfCFTA), African countries can take advantage of potential disruptions in global battery flows due to the US-China trade war and start building its own regional supply chains.
Assembling a lithium-ion battery pack involves a complex supply chain. These complexities are exacerbated by China’s influence in battery production and consumption.
China produces 74% of the world’s lithium-ion batteries and continues to expand battery plant operations despite its heavy reliance on raw battery metals from Africa.
Even American manufacturers are forced to import from China. But this is changing. Tariff imposition on Chinese exports to the United States are causing American companies to diversify battery production away from China.
African governments can capitalise on this trend by investing in battery production. The AfCFTA allows African countries to build regional supply chains catering to global demand at reduced costs.
A robust regional supply chain could be as follows: the DRC and Zimbabwe provide the essential battery minerals while South Africa uses those materials to manufacture batteries.
Investments in supply-chain infrastructure have the potential to transform Africa into a global battery-production hub. The global transition towards green energy and rapid decarbonisation holds significant opportunities for Africa, if seized correctly.
As battery demand soars and European and American firms build battery gigafactories, African leaders must step up and include battery production as a continent-wide development priority. A strong regional battery supply chain, powered by the AfCFTA, will bolster Africa’s relevance in the international battery market.
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