Zambia, DRC to build EV battery factory

From the newsletter

Zambia and DRC are set to build a transboundary electric battery & vehicle assembly factory in the Copperbelt & Katanga regions. The factory will use local minerals to make the batteries. Afrexim Bank is the project’s lead financier, while the United Nations Economic Commission for Africa (UNECA) is providing technical help.

• Both Zambia and the DRC are leading producers of copper and cobalt. In addition, they hold significant reserves of strategic minerals, such as rich deposits of manganese, iron, lithium, graphite, nickel, phosphorus and aluminium.

• The two countries signed an MoU in April 2022 to leverage their critical minerals for local manufacture of electric batteries and vehicles.

More details

• Zambia and the DRC currently have no EV battery manufacturing facilities. This is the case for most African countries, which mainly rely on importation of the batteries, primarily from China and India. This is despite the continent being the source of most of the minerals used to make the batteries.

• Under the MoU, the US pledged to help find US private firms to commercially invest in the project. It also included the construction of precursor plants in both DRC and Zambia. The project provides a golden opportunity for the duo to move from their historic status as exporters of cheap raw materials to manufacturer and supplier of battery precursors and the related knowledge-based services.

• Zambia and the DRC have spent years looking for partners to help them utilize their vast mineral resources to support local manufacturing industries. In December 2022, the two countries signed a tripartite MoU with the US for the development of an integrated value chain for the production of EV batteries, ranging from raw material extraction to processing, manufacturing, and assembly.

• Zambia and the DRC are also part of the Lobito Corridor Project that also includes Angola. The railway and road network, whose construction will begin in 2026, will give the two countries access to Angola’s Lobito Port on the Atlantic Ocean. The port is a key part of the plan by the duo to export both minerals and locally-made EV batteries and components to the global market. 

• Most of Africa’s EV battery manufacturing facilities are mainly located in North Africa, particularly Morocco. The country has recently built a $2 billion factory that is capable of producing batteries to power 1 million cars annually. South Africa, which is a leading automotive maker, also has a promising EV battery manufacturing market.  

Our take

• Africa is endowed with highly-sought mineral resources such as copper, lithium, cobalt, manganese, natural graphite and rare earth elements. These minerals are used to make wind turbines, electric motors, batteries, among other equipment. But major producers such as Zambia, DRC, Zimbabwe and others mainly export them in raw form, which fetches low prices. Development of local industries to process these minerals and make finished products on the continent will be a gamechanger for local industries.

• With a shift from internal combustion to electric vehicles — the battery electric vehicle market is poised to grow to $8.8 trillion by 2025, and $46 trillion by 2050 — a nearly six-fold increase in market value over the next 25 years, according to the United Nations Economic Commission for Africa (UNECA). The surge in demand for rechargeable batteries presents vast opportunities for Zambia, the DRC and the continent to propel development anchored on the clean energy transition. 

• Insufficient financing remains a major challenge for investors in Africa’s extractives. This is despite the continent boasting well-capitalized Development Finance Institutions (DFIs) who can invest in key projects especially in minerals that are critical for the clean energy transition. It is commendable that the Afreximbank is taking the lead in the Zambia and DRC EV batteries project. However, African DFIs should do more to make capital access easier for local investors.