CHINA’S early move to tap into new sources of lithium supply across Africa is proving to be a fruitful endeavour, helping the world’s top electric-vehicle battery producer navigate the tight market for this critical metal. Thanks to a surge in Chinese investment, mines throughout the continent are projected to increase lithium raw materials production by over 30 times the volume seen last year, reaching significant proportion
s by 2027, according to S&P Global Commodity Insights. Africa is expected to contribute 12 percent of global supply by then, a significant leap from the mere 1 percent in 2022.
The diversification of supply sources in Africa is a strategic move by China to secure its position in EV metals processing. This includes transforming raw materials such as lithium, nickel, and cobalt into chemicals used in battery components. As the United States intensifies efforts to build its own supply networks with free-trade partners like Canada and Australia, tapping into African resources provides a valuable alternative for China.
‘It is a sure thing that Africa will play an important role for China,’ said Peng Xu, a Beijing-based analyst for BloombergNEF. Africa offers an alternative source of raw materials, particularly in comparison to Australia, which is currently the top supplier but may face constraints as domestic refineries come online. Countries like Mali, the Democratic Republic of Congo, and Zimbabwe are anticipated to become top mined-lithium producers by the end of the decade.
Chinese companies have already made significant investments in African lithium mines. Projects in countries like Zimbabwe, Mali, the Democratic Republic of Congo, and Ethiopia are attracting attention and investment from companies like Zhejiang Huayou Cobalt Co., Chengxin Lithium Group Co., Ganfeng Lithium Group Co., and Contemporary Amperex Technology Co.
‘Chinese investment in Africa is definitely the largest source of capital for battery material supply in recent years,’ stated Martin Jackson, head of battery raw materials at CRU Group. These investments are essential for China’s supply chain to keep up with the growing demand from its battery manufacturers, which topped 1 terawatt-hour of production capacity in 2022 and continue to expand.
The US is also exploring options for raw materials supply from Africa but has only a few preliminary cooperation agreements with countries like the Democratic Republic of Congo and Zambia. Africa’s inclusion as a trade deal-friendly supplier will require greater scrutiny and negotiations.
While global supply of lithium raw materials is expected to jump 35 percent this year, with new operations contributing significantly to the increase, the market for lithium resources will remain tight until at least 2024. However, the situation is expected to ease from 2025 with the commissioning of new projects, particularly those in Africa and Canada.
As African nations seek to keep more revenue from lithium supplies at home, they are likely
to follow other countries’ footsteps in establishing processing or refining plants to raise the value of exports. Some countries, such as Zimbabwe and Namibia, have already introduced measures to discourage or prohibit exports of raw lithium ore. Meanwhile, Morocco, with its proximity to Europe and an abundance of phosphate needed in lithium iron phosphate cells, is emerging as a potential hub for EV battery production, having secured a preliminary deal for Africa’s first major EV battery factory with Chinese battery manufacturer Gotion High-Tech Co.
China’s strategic investments in African lithium mines and the continent’s growing potential as a key player in the global supply chain are setting the stage for Africa’s significant contribution to the electric vehicle revolution.
(with Bloomberg)
