Localizing Electric Vehicle Battery Production
FEATURED BLOG
Localizing Electric Vehicle Battery Production
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By Gerald Kilimo, Researcher at Botho
August 30, 2023
Charting the Path to E-Mobility Success
In the vast and diverse continent of Africa, a transformational idea is taking root. The concept of e-mobility, with its promise of cleaner transportation and reduced dependence on fossil fuels, has captured the imaginations of individuals, governments, and organizations alike. However, the rapid adoption of e-mobility in Africa faces substantial obstacles due to limited local production capabilities, which leads to a fragmented supply chain. Hence, establishing local battery manufacturing facilities that develop a robust, sustainable delivery network is a key factor in paving the way for the broader adoption of electric vehicles in Africa.
A Case for Decarbonizing Africa’s Transport Sector
In South Africa, transport is the third largest carbon-emitting sector, with almost 55 metric tons of CO2 emissions contributing more than 10% to the country’s national gross emissions. In Kenya, data for the National Climate Change Action Plan 2018-2022 revealed that fossil fuel vehicles accounted for about 13% of the country’s total greenhouse gas (GHG) emissions in 2015, a figure that is projected to rise to 17% by 2030 due to steady sector growth. Hence, the need for countries to transition away from fossil fuels through electric vehicles, which are vital to decarbonizing the transport sector - responsible for 27% of Africa’s total emissions and 16% of global emissions.
Illuminating the Path to Local EV Battery Production, Not Without Challenges
Transitioning to electric vehicles requires a strong foundation, including localized battery production. Morocco, Mozambique, Zambia, and the Democratic Republic of the Congo all have plans for local electric vehicle battery manufacturing projects. For instance, Mozambique, the world’s second-largest producer of graphite, an essential raw material for lithium-ion batteries, is in talks with Japanese authorities about a deal that should see the country not only producing electric vehicle batteries, but also meeting the growing EV local and global demand.
Recently, Morocco signed a Memorandum of Understanding (MOU) with China's Gotion High-Tech to develop a US$6.4 billion electric vehicle battery manufacturing complex, which is expected to create over 25,000 jobs. In the same vein, Zambia and the Democratic Republic of Congo (DRC) signed an MOU in December 2022, to facilitate the development of an integrated electric vehicle value chain from mining, refinery, battery cell and battery pack manufacturing up to the end user in the DRC and Zambia.
The uptake of electric-vehicle (EV) battery manufacturing projects requires careful consideration of several factors. Firstly, it is essential to acknowledge that MOU agreements are non-binding and merely serve as expressions of interest, meaning actual project implementation is contingent on funding availability, which is not guaranteed. Secondly, on the US-DRC-Zambia deal, the effective performance and success of the agreement depend, in part or wholly, on the ability of the US government to incentivize their private companies to invest in Africa. Aside from these two aspects, other challenges that prevent Africa from moving up the battery supply chain include difficulty in attracting funds for research, lack of detailed feasibility studies towards the development of discovered resources, inadequate infrastructure in terms of rail and road transport systems and port facilities, and inadequate access to reliable and affordable energy.
Unleashing Synergistic Sparks
The Economic Commission for Africa (ECA) notes that Africa has clear opportunities from the global green mineral boom, hence there is a need to develop regional value chains for these green economy products through the African Continental Free-Trade Area (AfFCTA). AfCTA’s role in reducing cross-border trade costs and eliminating bureaucratic barriers will empower seamless regional movement of EV batteries and related products, thereby enabling mineral-rich African countries to competitively bid for a significant share in the global electric vehicle market. To this effect, the African Export-Import Bank (Afreximbank), AfCFTA’s stalwart supporter, signed a Framework Agreement towards establishing Special Economic Zones for the production of EV batteries in DRC and Zambia. The execution of this framework is anticipated to fast-track its industrial infrastructure development and promote intra-African trade between the two African countries.
Meanwhile, Africa Roars Thunderously on Mineral Value Addition
Zimbabwe's recent ban on the export of raw lithium exemplifies a strategic move towards value addition, halting its significant revenue losses to foreign companies. This is quite a disruption to the normal supply chain! This move saw China’s Zhejiang Huayou Cobalt commission a US$300 million lithium processing plant in early April 2023, which is expected to export over 4.5 million metric tons of concentrated lithium per year. To date, Zimbabwe has exported over 30,000 metric tons of processed lithium. Similarly, Congo banned the export of copper and cobalt, creating an opportunity for the localization of precursor material manufacturing, which is now more cost-effective and environmentally sustainable. Therefore, by prioritizing value addition, Africa can maximize its mineral resources and secure a stronger position in the global supply chain.
In conclusion, establishing local EV battery manufacturing facilities in Africa represents a transformative step towards sustainable mobility. By focusing on domestic production, Africa can reduce its dependence on imported batteries, create jobs, and enhance the continent's competitiveness in the global EV market. These local manufacturing initiatives hold the potential to drive economic growth, technological advancement, and environmental sustainability, paving the way for a greener future for Africa.
Gerald Kilimo is a Researcher at Botho Emerging Markets Group.