Afcacia

Africa’s mineral heavyweights the Democratic Republic of Congo (DRC) and Zambia no longer want to see raw materials used in the manufacture of batteries and electric vehicles (BEVs) leaving their borders. They want to change the script and help their economies benefit directly from the green mobility industry. To effect this, they have signed partnerships to assemble EVs and batteries locally in Special Economic Zones (SEZs).

The DRC, renowned for its vast deposits of cobalt, lithium, tin, tantalum, tungsten and gold (3TG), is targeting to convert the resources into a job creation machine, and lift millions of Congolese residents out of economic strife.

This started with the DRC-Africa Business Forum convened in November 2021 co- organised by the country’s the Ministry of Industry, the UN Economic Commission for Africa (ECA), the African Development Bank (AfDB), Afreximbank, the Arab Bank for Economic Development in Africa (BADEA) and the Africa Finance Corporation (AFC), bringing together multi-sector stakeholders to explore ways of value-adding the country’s minerals endowments to alter the fortunes of the Congolese populace and moving the country up the ladder of the renewable energy market.

“We are firmly convinced that Industrial Parks and Special Economic Zones are critical tools the continent can deploy to fast-track its industrial infrastructure development, promote Intra-African Trade, accelerate the implementation of the AfCFTA and facilitate Export Development,” said Ms Oluranti Doherty, Afreximbank’s Director of Export Development during the signing of the framework agreement in April 2022. Ms Doherty views the move as a promotion of an inclusive BEV value chain, which sets the two countries on the global stage for green mobility development.

Pan-African infrastructure developer ARISE Integrate Industrial Platform (ARISE IIP) has been selected as the technical consultant to conduct the pre-feasibility study for the establishment of the SEZs in DRC and Zambia. This company has been tasked with accelerating the manufacture of pre-export value added products. This is geared towards capturing more value within these two economies, and igniting new demand for skilled engineers in the BEV industry.

The DRC has one pilot SEZ, located in Maluku within the capital Kinshasa, covering a 244-hectare area. It is being formed under a public-private partnership and offers tax and regulatory advantages for investors and entrepreneurs, including a five to ten-year tax exemption. However, this SEZ is yet to be fully operationalized but in the wake of the BEV manufacturing agenda, the country’s president Felix Tshisekedi is keen to revive it.

The DRC accounts for 70% of global cobalt supply and 88% of cobalt exports. Both the DRC and Zambia control 11% of global copper supply. Zambia exports of copper were valued at $7.67 billion in 2021, according to the United Nations COMTRADE database on international trade. In the same year, the DRC exported refined copper worth $8.9 billion to China ($4.72 billion), United Arab Emirates ($955 million), South Korea ($777 million), Saudi Arabia ($582 million), and Italy ($479 million). In 2021, the DRC imported $146 million in fossil fuel cars, while Zambia spent $118 million to import petrol and diesel vehicles. A huge chunk of these imports come from China.

Mining contributes 70% of Zambia’s foreign exchange, while cobalt accounts for 26% of the DRC’s exports. But the mining industry in the DRC, despite contributing the largest percentage of exports, contributes very little to its GDP and accounts for only 11% of jobs in the country. With the current push for BEVs manufacturing, the country hopes this will change.

Critical minerals needed in the manufacture of batteries for EVs are cobalt, lithium, manganese, nickel and graphite. According to a 2023 paper published by the Global Africa Business Initiative (GABI), the DRC and Zambia are also Africa’s leading producers of copper, together accounting for 14% of global production.

“Africa can leverage its abundant green mineral resources and hydroelectric power to become a low-cost and low-emissions producer of lithium-ion battery cathode precursor materials,” the paper notes. “Cell manufacturers currently rely heavily on China for battery precursors. However, the raw materials for batteries are, in most cases, imported into China from Africa and refined before being exported to Europe and elsewhere.”

The paper calls for car manufacturers in the US and Europe to lower their carbon emissions “by shortening the transport distance and capitalizing on the DRC’s hydroelectric powered grid and proximity to raw materials while promoting the EBV value chain with the central African country.”

The DRC has average grid emissions of 55gCO2/kWh, much lower than China’s 300-400gCO2/kWh. A 2021 Bloomberg survey shows that building a 10,000 metric-tonne cathode precursors’ facility in DRC would be $39 million, which is three-times cheaper than in the United States, and roughly half of its cost in China. It would also be greener.

It is worth noting that the 2023 edition of the annual Mining Indaba, Africa’s largest mining conference, in Cape Town, South Africa, drew the largest and most high-level U.S. delegation ever, including officials from the White House and the Departments of Commerce, Energy, and State at a time when the world needs these minerals to manufacture semiconductors that power industrial automation and artificial intelligence (AI).  The size and level of this delegation showed the awareness within the US government of the importance of securing access to Africa’s critical minerals.

More broadly, the US, DRC and Zambia signed an agreement to strengthen already existing cooperation to develop a cross-border integrated value chain for the production of EV batteries. This MOU is in line with the African Green Minerals strategy put forward by the African Development Bank, whose priorities include the establishment of battery and EV value chains, starting with two- and three-wheeled vehicles and commuter buses.

Will these countries export EVs to their neighbours? How many cars can they produce per year? How much capital is needed? It is not yet clear how the DRC and Zambia want to lead the BEV industry in Africa, but initial indicators show that given their huge mineral deposits and attractive policies on moving away from fossil fuels, investors will jet into their countries and help them develop proper BEV manufacturing plants, create a local and foreign market for the products, and install charging stations in major towns.

This is expected to create millions of jobs and help stabilize their local currencies against foreign ones as demand for clean mobility keeps rising in Africa and the world. Meanwhile, the International Energy Agency estimates that manufacturers of clean energy technologies will need forty times more lithium, twenty-five times more graphite, and about twenty times more nickel and cobalt in 2040 than in 2020. Due to this global shortage of critical minerals, Africa—which is home to around 30% of the world’s mineral reserves—has become a site of great power competition.

According to the Benchmark Mineral Intelligence (2023), demand for nickel, cobalt, lithium and natural graphite will rise by 196%, 276%, 590%, and 650% by 2035. Across the continent, Madagascar leads in nickel production while Mozambique holds the world’s biggest deposits of high-grade graphite. South Africa accounts for 33.5% of global production of manganese. Zimbabwe and Namibia, the only lithium producing African countries have banned the export of the mineral. But the DRC, Mali and Ghana
also hold huge deposits of lithium.

Zambia wants to position itself as a key supplier of two minerals – copper and cobalt, and has been wooing international investors to inject capital into its mines. KoBold Metals, a California based exploration company backed by billionaires including Bill Gates, Richard Branson and Jeff Bezos, intends to develop a $150 million copper- cobalt mine in Zambia. This is the first significant direct mining investment in the country in 30 years.

Again, during the Heads of State Summit in Russia last July, president Vladimir Putin said the Russian motor vehicle industry is keen at forming joint ventures with Zambia for production of EV batteries.

Research by the European Energy Agency shows that even with electricity generation, the carbon emissions of an electric car are around 17 – 30% lower than driving a petrol or diesel car. These emissions from electricity generation are reduced when low carbon electricity is used.

Electric batteries help in cutting 90% of the emissions made by petrol motorbikes, equalling 10 tonnes of carbon dioxide cut off in the e-motorcycle life cycle. High fuel costs, soaring maintenance costs and the environmentally damaging nature of petrol bikes and three wheelers are now pushing more African riders into green mobility where batteries are maintenance free.

Expanding renewable energy access for mines and industry across the continent is expected to extend access to the grid to almost 600 million people lacking access to reliable electricity. And channeling investments towards green industry processes can harness greater global climate financing flows, through mechanisms such as green bonds, climate-for-debt swaps and other initiatives.

The EBV value chain presents an opportunity for this mineral-based transformation for the continent. As consumers and countries switch from internal combustion to electric vehicles, it is estimated that the entire industry will grow to a value of $8.8 trillion by 2025, and $46 trillion by 2050, according to Bloomberg’s June 2023 annual Long-Term Electric Vehicle Outlook.