Powering the future: Africa’s competitive advantage in the global battery market

Africa's vast critical mineral reserves – including cobalt, lithium and manganese – are now central to the global rush for battery materials. With battery demand expected to triple by 2035, Africa's low refining costs and ease of access to resources offer a significant competitive edge. However, infrastructure and energy challenges must be addressed to realise this opportunity.

By 2035, global battery demand is expected to reach 7.8 TWh from 2.5 TWh in 2023, with China, the United States and Europe accounting for 80% of this total, according to a report "From Minerals to Manufacturing: Africa’s Competitiveness in Global Battery Supply Chains", published in October 2024 by the UK's Manufacturing Africa programme, in partnership with the Faraday Institution, a UK-based institute for electrochemical energy storage science and technology. 

By 2030, African countries have the potential to achieve significant cost competitiveness in refining raw materials, taking advantage of their proximity to mines, access to low-cost electricity and inexpensive labour. The region holds significant potential to access the lucrative global battery materials value chain, particularly in battery cell production and assembly, sectors projected to be worth around $1.4trn annually by 2030. 

The report highlights the continent's substantial cost advantages in refining critical battery minerals. The weighted average cost for nickel refining in Africa is projected to be $15,800 per tonne in 2030, compared to $17,800 in the rest of the world, making Africa 12% cheaper. 

Similarly, Africa's average refining cost for lithium is $4,300 per tonne, 36% lower than the global average of $6,200. Copper refining in Africa is also competitive, with an average cost of $2,600 per tonne, compared with $2,900 globally, offering a 10% saving. For manganese, Africa's refining cost of $2,500 per tonne is 29% cheaper than the global average of $3,000.

These cost advantages translate into considerable economic opportunities. According to the report, African facilities could generate around $400mn annually for lithium refining and create 100 to 300 skilled jobs. Nickel refining could generate around $2.3bn in annual revenues and support 1,200 to 1,400 jobs. Manganese refining is projected to generate around $100mn annually and create 700 to 900 jobs. Meanwhile, copper refining generates $4bn annually, creating opportunities for 700 to 900 jobs.

As Dr. Akinwumi A. Adesina, the president of the African Development Bank (AfDB), said recently, "Manufacturing battery precursors will give value to our natural resources, grow renewable energy technology, boost industrialisation, light and power Africa and provide jobs for millions of young Africans."

As the global energy transition accelerates, Africa's wealth of minerals is vital for meeting the growing demand for electric vehicle (EV) batteries and battery energy storage systems (BESS). Lithium iron phosphate (LFP) and nickel manganese cobalt (NMC) batteries are the dominant technologies, but alternatives like solid-state and sodium-ion are developing.

According to the Faraday Institution report, lithium-ion batteries – including chemistries such as LFP and NMC – are projected to constitute about 80% of global battery demand by 2035. 

Moreover, sub-Saharan Africa holds around 30% of the world's proven reserves of critical minerals essential for green technologies. The Democratic Republic of Congo (DRC) contains 48% of the world's cobalt reserves and accounts for 72% of global production, while South Africa possesses 38% of global manganese reserves and contributes 35% of production. Five African countries can access four or more critical raw materials required for battery manufacturing, highlighting the region's central role in meeting global battery demand.

Under the International Energy Agency's (IEA) Global Critical Minerals Outlook 2024, demand for key minerals is set to soar by 2040 in line with the net zero emissions by 2050 scenario. Nickel consumption is projected to double, cobalt demand is expected to follow suit and lithium use is forecast to increase ninefold.

The International Monetary Fund estimates that fully exploiting its critical mineral resources could boost sub-Saharan Africa's GDP by over 12% by 2050.

According to the IEA, China currently dominates the processing of crucial battery minerals, controlling 58% of lithium, 65% of cobalt, 35% of nickel and 40% of copper globally. Although African countries hold significant critical mineral reserves, much of this raw material is exported without local processing.

In Africa, battery demand is forecasted at just 7 GWh by 2030, representing a fraction of global requirements. This demand will primarily come from stationary BESS, contributing around 4 GWh, and electric two/three-wheelers, contributing 3 GWh. Yet the scale of Africa's market is currently insufficient to justify the establishment of a dedicated gigafactory, which typically requires a production capacity of 10-15 GWh per year.

Moreover, refining operations for battery cell production could occur in countries that mine the necessary raw materials or plan to begin by 2030. For cobalt, key refining locations include Cameroon, the DRC, the Ivory Coast, Madagascar, Morocco, South Africa, Tanzania, Zambia and Zimbabwe. Graphite refining is concentrated in Madagascar, a major producer of this essential material.

For lithium, countries such as the DRC, Ethiopia, Ghana, Mali, Namibia, South Africa and Zimbabwe are poised to play a significant role due to their rich reserves and mining potential. Similarly, nickel refining could be established in Cameroon, Ivory Coast, Madagascar, South Africa, Tanzania, Zambia and Zimbabwe, leveraging these nations’ ongoing extraction activities.

In the case of copper, Botswana, the DRC, Eritrea, Ivory Coast, Mauritania, Morocco, Namibia, South Africa, Tanzania, Zambia and Zimbabwe are well-positioned for refining due to their substantial mining activities. Manganese refining opportunities exist in a diverse range of countries, including Botswana, Burkina Faso, Cameroon, the DRC, Egypt, Gabon, Ghana, Ivory Coast, Morocco, Namibia, Nigeria, South Africa, Togo and Zambia.

Phosphate refining, crucial for specific battery chemistries, could be centred in Algeria, Angola, Guinea-Bissau, Senegal, South Africa and Uganda. 

Furthermore, battery cell manufacturing in Africa presents an excellent opportunity to take advantage of the continent's abundant raw materials, cost advantages and proximity to export markets such as the US and EU. 

Manufacturing components such as cathodes, anodes, separators and electrolytes require specific active materials, including LFP, NMC and natural or synthetic graphite for anodes. Setting up a cathode or anode active materials facility involves an investment of around $300mn for a production capacity of 30,000 tonnes per year (tpy), according to the report. 

Active material production should correspond with raw material availability. Anode production hubs could include Botswana, the DRC, Madagascar, Malawi, South Africa, Zambia and Zimbabwe. 

Cathode material production for LFP could focus on Algeria, Morocco, South Africa, Tanzania and Tunisia, while NMC cathode production could expand to countries such as Burkina Faso, Cameroon, Gabon and Nigeria. The report says success depends on low-cost, reliable energy, efficient logistics, uninterrupted raw material supplies and government support.

Gigafactories, requiring $1bn in capital expenditure, can produce 10-15 GWh of batteries annually for export markets. According to the report, Morocco and Tanzania are set to produce LFP battery cells competitively at $68-72 per kWh for the EU market. By 2030, this could generate $10bn-15bn annually in revenues and create 22,000–25,000 jobs, rivalling global players such as China, Indonesia and the US.

Furthermore, according to experts, the DRC stands out as the African country with the most significant opportunities to become more involved in the global battery manufacturing value chain (BMVC). It produces 72% of the world's cobalt, yet it accounts for just 3% of the battery and electric car value chain. 

However, the DRC needs other upstream mineral inputs to produce lithium-ion batteries, such as manganese from South Africa and Madagascar, copper and graphite from Mozambique and Tanzania, and phosphate and lithium from Morocco. 

According to the report by the Faraday Institution, to succeed, African governments must establish special economic zones with zero import duties, provide subsidies and secure long-term off-take agreements. The EU must also avoid imposing import taxes on African-made batteries and decrease its reliance on Chinese imports. 

Countries that succeed in entering the BMVC often do so by taking advantage of significant local reserves of critical raw materials or catering to substantial domestic demand. Examples include Canada, with its substantial raw material base, and China, which benefits from robust local demand and established supply chains. Economies of scale are crucial to compete effectively, as producing battery cells and components require a high volume to achieve cost efficiency. 

Major markets like the European Union, the United States and China have regionalised their supply chains to minimise costs and secure supply reliability. Government support has also played a critical role in fostering these industries, with policies like the US Inflation Reduction Act and the EU Green Deal providing targeted incentives and facilitating local production.

Despite these opportunities, Africa faces significant challenges in refining its raw materials domestically. Currently, most raw materials are exported in unprocessed forms, leaving the continent with limited value addition. Infrastructure deficits, unreliable electricity and a shortage of skilled labour are further obstacles. 

However, African countries must move up the value chain through mineral beneficiation, smelting and refining and move away from exporting unprocessed commodities to achieve significant economic growth. Developing a refinery requires substantial investment, with estimated capital expenditures ranging from $500mn to $1.5bn.

Strategic measures such as policy development, infrastructure investment and cultivating public-private partnerships can unlock Africa's potential. For instance, policies such as export bans on unprocessed minerals, as implemented in Zimbabwe and Namibia, could incentivise local beneficiation and attract downstream investments.

African countries aiming to establish a presence in the global BMVC must target export markets, particularly the European Union and the United States. These markets face undersupply and are keen to reduce dependence on Chinese imports. 

Furthermore, the African Continental Free Trade Agreement (AfCFTA) offers a framework to improve regional cooperation, reduce trade barriers and support localised value chain development.

Trade agreements like Everything But Arms and Morocco's Free Trade Agreement (FTA) with the US strengthen Africa's role in the global BMVC by improving access to key markets. 

While local manufacturing could meet some of Africa's demand, it must remain cost-competitive with Chinese imports. China dominates global production with low costs and large-scale output, but policy shifts in the EU and US are driving diversification. The EU's Critical Raw Materials Act (2024), Green Deal, and CBAM framework promote supply chain diversification and local battery production. The Inflation Reduction Act (IRA) encourages domestic production and imports from FTA countries in the US, aiming for 100% local EV and component production by 2029.

However, Africa lacks a coordinated regional strategy to maximise these opportunities. While countries such as Zimbabwe and Kenya have taken steps to promote local processing and EV adoption, efforts remain fragmented. 

The continent's ability to compete will depend on coordinated efforts by governments, private investors, and international stakeholders to create an environment conducive to large-scale industrial projects.

Furthermore, the Critical Minerals Africa Group (CMAG) was launched on 7 November 2024 by players in the region's critical minerals industry. The organisation is led by CEO Veronica Bolton Smith, founder of the Connect Africa Network and a director at Palladium International, a consulting firm tackling social and economic challenges. 

Despite the region's significant role in the critical minerals sector, the continent faces challenges in influencing global supply chain policies. International business entry barriers include limited local knowledge and weak regional relationships. The CMAG seeks to address these issues by creating diversified supply chains that benefit local communities and accelerate economic development. 

Moreover, the private sector interest in Africa's battery value chain is growing, with global companies recognising the continent's potential. Gotion High-Tech, a leading Chinese EV battery manufacturer, is investing significantly in Morocco to establish a robust battery production ecosystem. 

In June 2024, Gotion signed an agreement with the Moroccan government to build a gigafactory in Kenitra, with an initial investment of approximately $1.3bn. This facility is expected to have a production capacity of 20 GWh and aims to create around 17,000 jobs, including 2,300 highly skilled positions. 

Plans are in place to expand the plant's capacity to 100 GWh, which could increase the total investment to $6.5bn. This expansion aligns with Morocco's strategic goals to improve its automotive sector and meet the growing global demand for EVs.

Additionally, Gotion has partnered with ACWA Power, a Saudi firm specialising in energy and water projects, to develop an $800mn renewable energy project dedicated to powering the gigafactory. 

However, the report from the Faraday Institution also highlights the need for improvements in infrastructure, energy reliability and workforce development so that African countries can fully realise the opportunities.

According to experts, countries and regions must either have a supply of crucial raw materials or a need for batteries in the area to attract battery production. With raw materials, they can entice downstream manufacturers by showcasing their supply. If there is a local need for batteries, manufacturers will relocate to the area to be close to their clients in the automotive/BESS industry. An abundance of crucial battery raw materials in Africa could attract more value-added processing and manufacturing activities downstream.

Addressing challenges in infrastructure and energy will be crucial, alongside cultivating public-private partnerships to unlock capital. With global markets actively seeking alternatives to China, Africa has a unique opportunity to position itself as a vital supply chain link. With suitable investments and adequate policies, the region could drive the global battery revolution and redefine its economic trajectory – transforming from a supplier of raw materials to a hub of high-value refining and manufacturing.