Inspenet, July 5, 2023.
China’s swift action to tap into new lithium supply hubs from Africa is paying off, helping the world’s top maker of electric vehicle batteries overcome market shortages of this key metal.
According to S&P Global Commodity Insights, mines across the continent, fueled by a series of investments from Chinese companies, are expected to increase production of lithium raw materials more than 30 times by 2027 compared to last year.
Diversifying supply sources will support China’s efforts to maintain its dominance in metal processing for electric vehicles, converting raw materials such as lithium, nickel and cobalt into chemicals used in battery components. Meanwhile, the United States is intensifying its efforts to build its own supply networks in collaboration with free trade partners and allies such as Canada and Australia.
Lithium from Africa: key element to meet demand
“Africa is set to play an important role for China, especially as an alternative source of raw materials compared to Australia, which is currently the main supplier and whose exports could be constrained as domestic refineries come online.” This was said by Peng Xu, a Beijing-based analyst at BloombergNEF.
According to BNEF data, Mali, the Democratic Republic of Congo and Zimbabwe are expected to join the top producers of mined lithium by the end of this decade.
Last month, Zhejiang Huayou Cobalt Co. received its first shipment of lithium concentrate from a project in Zimbabwe, while Chengxin Lithium Group Co. announced that its Sabi Star lithium mine had started production in the country.
For its part, Ganfeng Lithium Group Co. has invested in the Goulamina mine in Mali, while Contemporary Amperex Technology Co. is backing a project in the Democratic Republic of Congo. Sichuan Yahua Industrial Group Co. is involved in a project in Ethiopia.
According to Martin Jackson, head of battery raw materials at the London-based CRU Group, Chinese investment in Africa has become the main source of capital for the supply of battery materials in recent years. Jackson also stressed that investments in new regions are essential for China’s supply chain to keep pace with growing demand from the country’s manufacturers.
For its part, the United States is exploring options for the supply of raw materials in Africa, although it has only some preliminary plans so far, including tentative cooperation agreements with the Democratic Republic of the Congo and Zambia, according to Alice Yu, a metals analyst. and mining at S&P Global Commodity Insights, who also noted that more scrutiny will be needed to see Africa as a favorable supplier in trade deals.
According to a BNEF report published on June 30, global supply of lithium raw materials is expected to increase 35% this year , with about half of that coming from new operations. The report highlights that the lithium resources market will remain tense throughout this year and into 2024, although it is expected to ease from 2025 as more projects come online, including in Africa and Canada.
African countries will take action
African countries are likely to follow the trend of other nations and seek to retain more revenue from lithium supplies by setting up processing or refining plants that add value to exports. Zimbabwe and Namibia have recently introduced measures to discourage or prohibit exports of raw lithium ore.
Morocco, which has a free trade agreement with the United States, is positioning itself as a possible production center for batteries for electric vehicles, taking advantage of its proximity to Europe and the availability of phosphate needed for lithium iron phosphate (LFP) cells. .
Earlier this year, the Moroccan government announced that Chinese battery maker Gotion High-Tech Co. had reached a preliminary agreement to build the first large battery factory for electric vehicles in Africa, of which an annual capacity of 100 gigawatts and an investment of 6,500 million euros are expected.
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