The continent’s supply of abundant critical natural minerals gives it a privileged position globally in the battery value chain particularly as the US and European Union seek to diversify their supply chains away from China. This strategic pivot opens the door for Africa to transition from being a mere extractor of raw materials to a producer of high-value battery products. New research from the UK Government-funded programme Manufacturing Africa and the UK’s leading research group on batteries and energy storage, the Faraday Institution shows some emerging bright spots where Africa could compete.
Africa stands at the threshold of a significant opportunity to become a global player in battery manufacturing. The global battery market is undergoing a transformative shift, driven by the increasing adoption of electric vehicles (EVs) and renewable energy storage solutions. As the US and the European Union strive to reduce their dependence on Chinese battery supplies, Africa’s strategic position becomes increasingly relevant thanks to its rich reserves of essential raw materials which could provide up to a 40% cost advantage for Africa-based refining, compared to global counterparts by 2030. Global demand for batteries is projected to rise to 7.8 TWh by 2035, with China, the US, and Europe accounting for 80% of this demand. Although Africa currently represents a small fraction of global battery demand (7 GWh from two/three-wheelers and station storage in 2030), the continent’s market for electric two/three-wheelers and stationary storage systems (BESS) is expected to grow significantly by 2030. To capitalize on this potential, Africa must achieve economies of scale, aiming for a minimum production capacity of 10-15 GWh per Gigafactory, and seek to serve global markets.
The key opportunities in the African battery manufacturing value chain point to refining, cell manufacturing, and battery pack assembly as the most attractive opportunities and there are strategic steps that African countries will need to take to secure their position in the global battery manufacturing landscape.
Key Opportunities in the African Battery Manufacturing Value Chain
Refining: Unlocking Cost Competitiveness
Refining raw materials is a critical step in the battery manufacturing process. By 2030, African countries can achieve cost competitiveness in refining compared to the rest of the world leveraging their access to key battery components such as lithium, nickel, manganese, and copper providing a solid foundation for refining activities and assuming full integration between mines and refineries.
- Lithium: Integrated African lithium refiners can gain a competitive edge through raw material integration, potentially making them 35-40% more competitive than refineries in China, Canada, the US, and Australia. A lithium refinery in Africa could generate approximately USD 0.4 billion in annual revenues and create 100-300 direct jobs.
- Nickel: Integration with mines and leveraging high-quality deposit types can provide African countries with a 10-15% cost advantage in nickel refining compared to global competitors. Approximately USD 2.3 billion revenues annually and 1,200-1,400 direct jobs could be generated from a nickel refinery.
- Manganese: Integrated African players can effectively compete with non-integrated Chinese producers by refining manganese at 10-15% lower costs. A manganese refinery in Africa could generate approximately USD 0.1 billion in annual revenues and create 700-900 direct jobs.
- Copper: Integrated African copper refiners can achieve a 25-30% cost advantage through raw material integration and quality of copper deposits. Approximately USD 4 billion in annual revenues and create 700-900 direct jobs could be generated from a copper refinery.
Battery Cell Manufacturing: Tapping into Global Markets
Initial analysis indicates that countries like Tanzania and Morocco could achieve cost-competitive battery production under certain conditions. For instance, Morocco could produce LFP batteries that sell at $72/kWh and Tanzania at $68/kWh, compared to $68/kWh in Europe, which benefits from subsidies.
However, to compete effectively on the global stage, African governments need to forge favorable trade agreements with Europe, implement subsidy programs and establish Special Economic Zones (SEZs). These measures will help local manufacturers achieve the necessary scale and cost competitiveness to serve international markets.
Battery Pack Assembly: Leveraging Local Capabilities
Several companies in East and West Africa have already begun importing cells from China and assembling battery packs locally at a small-scale, primarily for domestic electric two/three-wheelers and BESS for off-grid solar systems. By manufacturing battery cells locally, Africa could assemble them into packs for international shipping, further enhancing its competitive position.
Environmental Challenges Caused by Increased Battery Supply
While Africa currently faces challenges in positioning itself as a leader in battery recycling due to limited waste management schemes, it is crucial to develop a strategic plan for handling battery recycling. Effective management of battery recycling is essential to mitigate environmental impacts and continue to attract investment. Governments and development partners must work on strategies and technologies for viable recycling and battery disposal solutions. Leveraging advancements in modular recycling technologies developed elsewhere can provide a pathway for Africa to address its recycling challenges and contribute to a sustainable battery manufacturing ecosystem.
Conclusion
Africa’s abundant access to critical raw materials, combined with strategic and complementary investments in infrastructure including reliable electricity supply, transportation networks, advanced manufacturing facilities and policy support, could position the continent as a potential global leader in battery manufacturing. By developing integrated value chains that enhance cost competitiveness, implementing subsidy programs to support local manufacturers and attract investment, African countries could unlock significant economic opportunities and contribute to the global transition to clean energy. To realize this potential, African players will need to prioritize cross-continent collaboration with private sector actors, governments and international financiers as well as research and development to drive innovation in battery technologies, recycling solutions, and sustainable manufacturing practices.
For a detailed analysis of what it will take to unlock the opportunities in battery manufacturing in Africa, download the full report here and the accompanying annexure here.
For specific questions concerning the report, please email info@manufacturingafrica.org
