Morocco joins Zambia, DRC EV battery project

From the newsletter

The Zambian government has received interest from Morocco to partner for the establishment of an electric vehicle battery manufacturing plant in the Southern Africa country. The two countries have long engaged in talks for a battery facility in a tripartite deal that also includes the Democratic Republic of Congo (DRC). 

• Morocco, a leading automotive giant, has expertise in EV battery production. On the other hand, Zambia and the DRC have lithium, copper and cobalt used to make EV batteries. The idea is to combine this to make what would be the region’s first EV battery manufacturing plant.

•  Zambia and the DRC mainly export their minerals in raw form, primarily to China. These raw exports fetch throwaway prices, with China and other importers benefitting from the value addition. The next step for the three prospective partners to find how they can process these minerals locally.

More details

• The proposed partnership between Zambia, Morocco and the DRC will not just stop at building an EV battery factory in Zambia. Morocco is targeting to buy the batteries that will be made through the initiative. The North African country has ambitious plans to become a leading manufacturer of EVs.

• The African Continental Free Trade Area (AfCFTA) is central to this collaboration, which is being spearheaded by the United Nations Economic Commission for Africa (UNECA). The AfCFTA, which came into force in January 2021, seeks to progressively remove trade barriers between African countries to boost intra-Africa trade.

• As neither Zambia nor the DRC have significant demand for EV batteries at the moment, besides exporting to Morocco, there is rapidly growing demand for these batteries on the continent. Demand is especially hot in South Africa, Egypt, Kenya and Nigeria, which have started to sell EVs in their thousands each year.

• The project is also a good starting point for Zambia to move further along towards end-to-end manufacturing of EV batteries. Countries that have this distinction can make EV batteries from scratch, right from mining, processing and putting the batteries together. No African country currently boasts this capacity.

•  However, Morocco is the closest country in Africa that could achieve this status as soon as next year. The country, which is on its own a major producer of minerals used to make EV batteries, is building factories that can separately make anodes and cathodes, the most important parts of batteries.

• For Zambia and DRC, there is still a long way to go. They still need to convince investors to put their cash into building processing plants for their minerals. Zambia’s neighbour, Zimbabwe, for instance has a factory that processes lithium to a concentrate which is then exported.

• Besides these capacity challenges, security remains a concern for investors, especially the situation in the DRC. While the majority of the country is relatively safe, war is ongoing in parts of Eastern DRC, which is a worry to investors.

• That notwithstanding, African countries should first sort out trade barriers between themselves. To understand this challenge, the maiden ship carrying tea from Kenya to Ghana during the pilot phase of the AfCFTA in 2022 took eight months to arrive in Accra! This is not ideal for intra-African trade in EVs and locally-made components such as batteries. 

Our take

• While Africa has abundant mineral resources critical to make EV batteries, it does not have adequate skilled personnel to make these batteries. The continent suffers from serious brain drain, with its finest engineers often poached by US, European and Asian firms. Filling this gap will be essential in enabling battery manufacturing to take off in Africa.

• The technology for making EV batteries is constantly changing. African countries cannot afford to invest in battery manufacturing using technology that is old or will be old soon enough. The key is to find out what works now, what doesn’t work and what will work in the future to keep up with the times.

• Making batteries on the continent is commendable, but no one will buy them if they are more expensive than their imported equivalents, unless they have superior quality. Therefore, care should be taken to ensure that any potential factory will make cost-effective batteries.