Southern Africa is best-positioned for LIB GVC
With well-established LIB downstream GVC operations in Asia, the realisation of Africa’s ambition for greater value-add may be significantly dependent on greater EV adoption on the continent itself. In our earlier publication “Electric Vehicles: An ironic African opportunity?”, we highlighted how there could be as much as 50,000 to 300,000 of new EV sales per annum by 2030. But there is already a strong global case, especially with LIBs, regardless.
According to the 2021 BloombergNEF electric vehicles outlook report, EV battery demand, with 2020 shipments up by 45 percent, is expected to grow 15-fold to 2,576GWh by 2030, with global manufacturers expected to have 2,539GWh annual capacity by 2025. Average battery pack prices, which are expected to be below US$100/kWh on a volume-weighted average basis by 2024, are expected to be almost halved to US$58/kWh by 2030 (BloombergNEF, 2021).
Thus, an ambition to mine the battery minerals, refine them, produce cells and assemble them into batteries for onward installation in EVs in a GVC that stretches from the DRC, Tanzania, Mozambique to throughout the SADC region is not farfetched. However, it would require significant commitment, focus, determination and a long-term view from the respective African governments, interested firms and international partners. Amid significant constraints around infrastructure, logistics, financing, and the policy environment, SADC believes this ambition is realisable.
With the right incentives and economic conditions, the numerous local and foreign firms which currently mine key LIB minerals in the SADC region, could easily forward integrate their African operations. South Africa’s Manganese Metal Company already produces high-grade electrolytic manganese metal for NMC cathode. Similarly, South Africa’s Thakadu Battery Minerals’ US$20m 30,000 tonnes per annum nickel sulphate refinery, which gets its primary crude feedstock from Sibanye-Stillwater, started production in March 2021.
Zambia’s Chambishi and Madagascar’s Ambotovy, which process some cobalt, do not produce exportable LIB-grade material, however. Besides, operations at the Chambishi Metals Refinery have been suspended, owing to cobalt and copper concentrates supply shortages. In Mozambique, a joint venture to process graphite has been established between Australia’s Battery Minerals and American graphite processing giant Urbix.Similarly, Tanzania granted permission to Magnis Technologies in 2018 to process its graphite resources into value-added products. In the same vein, the Zimbabwean government has set in motion plans for a lithium-ore processing plant in Bulawayo.
Read also: Nigeria missing from electric vehicles value chain despite mineral deposits
In essence, there is increasing recognition and effort toward greater beneficiation of EV battery minerals in the SADC region, where the key countries outside of the DRC and Tanzania are situated. Progress has stalled, however, owing to significant barriers like skills shortage, inadequate financing, weak and limited infrastructure, sluggishness with industrial policy implementation, ill-advised taxation and a relatively small market (Foli, 2020).
South Africa is probably best placed to move forward the farthest in the earliest possible time. In January 2020, for instance, South Africa’s Megamillion Energy Company announced plans to construct a US$35m 0.25 GWh lithium-ion battery production pilot plant, with plans to increase annual output to 32 GWh by 2028, albeit to be initially focused on the energy storage market but ultimately for EVs as well. Owing to Covid-19 disruptions, however, operations at Megamillion’s facilities are now expected to commence much later, perhaps in 2022.
According to Foli (2020), South Africa’s Council for Scientific and Industrial Research (CSIR), South African Nuclear Energy Corporation (NECSA), aluminium supplier and exporter Hulamin, and integrated energy and chemical company Sasol, “have the facilities and capability to make cell components for lithium-ion batteries.” What is stopping them from tapping the opportunity then? “There is currently no market in SADC for them to adapt their processes to make lithium-ion battery-related components (Foli, 2020).”
Beyond cell component manufacturing, South Africa also already has scalable lithium-ion battery pack assemblers, but are currently for non-EV battery applications. Durban-based Maxwell and Spark produces lithium-ion battery packs for forklifts and refrigeration trucks, for instance. South African OEM Battery Powered Industries, on the other hand, assembles LIB packs for underground mining equipment.
With greater EV adoption expected on the continent over time, but more immediately in South Africa, second-life repurposing and eventual recycling of EV batteries may become attractive. The uYilo e-Mobility Programme at the Nelson Mandela University in Port Elizabeth, South Africa, has capabilities for such repurposing activities.
An edited version of this article was first published by Nanyang Business School’s NTU-SBF Centre for African Studies, Singapore. References, figures and tables are in the original article. See link viz: https://www.ntu.edu.sg/cas/news-events/news/details/electric-vehicles-africa-s-battery-minerals-and-gvc-opportunities
