- Lithium battery industry to grow over 30 percent annually from 2022 to 2030
- Market value for lithium batteries to exceed US$400 billion by 2030
- DRC, Zambia and Tanzania looking to refine cobalt, manufacture lithium batteries
The sale of Electric Vehicles (EVs) is booming in the transport industry of the developed world, and now Africa wants in.
Rather than continue to supply raw materials for the making of the electric vehicle, countries like DRC, Zambia, and Tanzania, want to refine the ores and even manufacture the final product, lithium batteries.
Their ambitions are well placed because the lithium battery industry is booming and will only keep growing. A 2022 analysis by the McKinsey Battery Insights team projected that the entire lithium-ion battery chain, from mining through recycling, could grow by over 30 percent annually by 2030 when it would reach a value of more than US$400 billion.
“Batteries for mobility applications, such as electric vehicles (EVs), will account for the vast bulk of demand in 2030,” the analysts project.
Expansion of the market will grow thanks to climate change regulations and policies. However, analysts also cite China as a major market for electric vehicles.
“China could account for 45 percent of total Li-ion demand in 2025 and 40 percent in 2030,” reads the report.
But; “Growth is expected to be highest globally in the EU and the United States, driven by recent regulatory changes, as well as a general trend toward localization of supply chains.”
Africa has a lot to gain by investing in the refining of the cobalt, nickel, and copper ores and manufacturing of the final lithium core to run the electric vehicle batteries.
“In total, at least 120 to 150 new battery factories will need to be built between now and 2030 globally,” McKinsey projects, giving a good enough market estimate for Africa to invest.
However, since investment is not only about the market demand, but it is also the market returns that get investors going and when it comes to lithium batteries, the returns are off the charts.
“In line with the surging demand for Li-ion batteries across industries, we project that revenues along the entire value chain will increase 5-fold, from about $85 billion in 2022 to over $400 billion in 2030,” reads the McKinsey report.
The findings of this report are been reflected in decisions by large vehicle manufacturers to produce more EVs, even Ford, the US manufacturer so famously known for its gas guzzlers, is making the switch.
Recently Ford announced that it will this year, stop production of its classic Ford Fiesta sedan in favor of electric vehicle production for the European market.
“We’ve essentially ‘refounded’ Ford, with business segments that provide new degrees of strategic clarity, insight and accountability to the Ford+ plan for growth and value. It’s not only about changing how we report financial results; we’re transforming how we think, make decisions and run the company, and allocate capital for the highest returns,” explains Ford’s CFO, John Lawler.
If that is not enough, consider the 2020 report by the United Nations Conference on Trade and Development (UNCTAD) that projected that some 23 million electric vehicles will be sold over the coming decade.
“The market for rechargeable car batteries, currently estimated at $ 7 billion, is forecast to rise to $ 58 billion by 2024,” reads the UNCTAD report.
Global demand for cobalt to produce lithium batteries has tripled since 2011, in fact, Benchmark Mineral Intelligence which researches and publishes market data on the lithium-ion battery and electric vehicle (EVs) supply chain, estimates that demand for cobalt will reach 190,000 metric tons by 2026.
Riding on such huge return projections and the assured market growth given global policies on reducing carbon footprints, especially from vehicles, African investors are assured of sound investment in refining, manufacturing, and recycling lithium batteries.
DRC, Zambia, Tanzania to manufacture lithium batteries
“Use of electric vehicles is gaining traction worldwide due to their low carbon footprint. The governments of Zambia and the Democratic Republic of Congo (DRC) are partnering to invest in the production of lithium-ion batteries which power these electric vehicles (EVs),” reports local media,
Zambia and DRC form part of what is known as the Copper belt, a mineral-rich stretch of land running from the Central African Republic, through the DRC all the way to Zambia.
What is so unique about the Copper belt? Well, this 280 miles stretch of land just happens to account for the world’s largest supply of not only copper but nickel and cobalt too.
This is the source of the ores, the Copper belt, however, the refining and value addition takes place across the sea in Belgium, China, Finland, and Norway, now, DRC, Zambia, and Tanzania want to step in and add value to the ore by refining it before selling and if they secure the required investment and technology transfer, the Sub-Saharan countries hope to even manufacture the batteries themselves.
This ambition is well past the ideology stage, the governments have already signed a memorandum of understanding forming the Zambia–DRC Battery Council tasked with handling investment into the refineries and battery manufacturing.
“The joint Zambia-DRC battery precursor initiative has a vision to create a competitive electric vehicle battery value chain aimed towards sustainable development and inclusive growth,” commented Zambia’s foreign affairs and international cooperation minister Stanley Kakubo.
He said the move is in line with the country’s development aspirations to diversify and industrialize its economy.
On the other hand, when it comes to Tanzania, the DRC has made another pact to establish a smelting factory in Tanthe country which will help minimize transport costs for export since Tanzania has one of Africa’s largest most modernized seaports, the port of Dar es Salaam.
“Under the arrangement, the Congolese government will use smelters and other mineral processing plants in Tanzania to process its raw cobalt for export,” local media reported.
“We are negotiating with the DRC to process cobalt and other minerals in Tanzania as an option to reduce transport costs of raw minerals to markets overseas,” affirmed Tanzania’s Minister for Minerals Angela Kairuki citing the fact that, other than reduced transport costs, the DRC, though the world’s largest cobalt producer, lacks the electricity it needs to run cobalt smelters in the country.
From the copper belt in DRC and Zambia to cobalt smelters in Tanzania to electric vehicles in San Diego, London, Paris and Hong Kong, lithium batteries are the future, can Africa tap into this green-clean market?