THE Democratic Republic of the Congo (DRC) can leverage its abundant cobalt resources and hydroelectric power to become a low-cost and low-emissions producer of lithium-ion battery cathode precursor materials, says a new study.
The BloombergNEF (BNEF) study on a unified African supply chain estimates that it would cost $39 million to build a 10,000 metric-ton cathode precursor plant in the DRC. This is three times cheaper than what a similar plant in the US would cost. A similar plant in China and Poland would cost an estimated $112 million and $65 million, respectively. Precursor material produced at plants in the DRC could be cost competitive with material produced in China and Poland but with a lower environmental footprint.
The study, which was undertaken at the behest of UN Economic Commission for Africa (ECA), Afreximbank, the African Development Bank (AfDB), the Africa Finance Corporation (AFC), the Arab Bank for Economic Development in Africa (BADEA), the African Legal Support Facility (ALSF), and the UN Global Compact, says emissions associated with battery production could be cut by 30 percent compared with the existing supply chain that runs through China, if cathode precursor materials (the intermediate material between raw and finished cathode material) were produced in the DRC, with Poland handling the production of cathode materials and cells, and Germany the final pack assembly. This is due to the DRC’s proximity to cathode raw materials and heavy reliance on hydroelectric power plants.
‘The DRC’s cost competitiveness comes from its relatively cheap access to land and low engineering, procurement and construction, or EPC, cost compared to the US, Poland and China,’ said Kwasi Ampofo, lead author of the report and BNEF’s head of metals and mining. ‘European 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. Automakers in Europe can lower their emissions by shortening the transport distance and capitalising on the DRC’s hydroelectric powered grid and proximity to raw materials,’ he added.
Electric vehicles represent a $7 trillion market opportunity between today and 2030, and $46 trillion between today and 2050, according to the study, The Cost of Producing Battery Precursors in the DRC, launched at the DRC-Africa Business Forum 2021 taking place November 24-25. It says while there are notable leading electric-vehicle and cell manufacturers today, the sheer scale of growth expected in the coming decades means that there is inherent uncertainty over which companies and countries may come to dominate this new value chain. African countries could play a major role in the lithium-ion battery supply chain by taking advantage of their abundant natural resources and onshoring more of the value chain.
James Frith, head of energy storage at BNEF said: ‘For regions to successfully attract battery component or cell manufacturing they need to have either a supply of key raw materials or local demand for batteries. If they have access to raw materials, they can use this supply to attract downstream manufacturers. If they have local demand for batteries cell manufacturers will move to the region to be close to their customers, particularly in the automotive industry. Africa has a wealth of critical battery raw materials and is in a position to use these to attract more value-add in downstream processing and manufacturing.’
The AfCFTA agreement, which went operational on January 1 2021, has the potential to create the largest free trade area in the world. If approached correctly, African countries can capitalise on their abundant natural resources, growing demand for vehicles and rapid urbanisation to build a global hub to produce electric vehicles.
‘We are only at the beginning of the path to achieving net-zero emissions globally. Emerging economies in Africa can gain significant long-term economic value by quickly setting up projects that support the low-carbon transition with transparent governance frameworks,’ said Ashish Sethia, global head of commodities at BNEF.
‘We are into the Decade of Action and with only 9 years left to deliver on the SDGs. The Africa Continental Free Trade Area, the largest trading bloc globally, provides a compelling case for the Democratic Republic of Congo to leverage its and Africa’s abundant mineral and clean energy resources to become a growth pole of the global clean energy transition and inclusive resilient development that leaves no one behind,’ said Vera Songwe, Executive Secretary of the United Nations Economic Commission for Africa (ECA).
She added: ‘The DRC produces about 70 per cent of global cobalt but captures just 3 percent of the battery and electric vehicle value chain. With a functioning AfCFTA, the DRC can receive other upstream mineral inputs needed for lithium-ion batteries – such as manganese from, say, South Africa and Madagascar, copper from Zambia, graphite from Mozambique and Tanzania, phosphate from Morocco, and lithium from Zimbabwe, to name but a few.
‘The DRC can truly become the regional and global centre of gravity for the production of precursor materials for batteries to drive the fourth industrial revolution. In so doing, the country and the rest of Africa can extend their access from the $271bn battery precursor segment to the more lucrative $1.4 trillion combined battery cell production and cell assembly segments of the battery minerals global value chain. This requires plenty of reliable and affordable power, which can be achieved by connecting Africa’s power systems with the Grand Inga at the core and with wind and solar power from North African countries, the Sahel and South Africa, geothermal from East Africa, hydro from Central and West Africa. But, to reap these benefits, African leaders must make the commitment to facilitate the needed investments and make the AfCFTA deliver for the continent.’