The battery commodities market is experiencing a golden age of growth and development, spurred by rapid technological advances and the growing demand for batteries to support cleaner mobility and the roll-out of variable renewables generators.
Global battery demand is forecast to grow by some 1 615 GWh, or 384.5%, over the next eight years, according to statistics aggregator Statista. This anticipated upsurge in demand for lithium-ion and other batteries is largely attributed to the rise of electric vehicles (EVs), which are expected to progressively replace internal combustion engine passenger cars.
Unlike more established commodity markets, such as gold and platinum, the battery market is still relatively immature, creating a “golden opportunity” for Africa’s mining sector to meet the growing gap in the market, says engineering consultancy Erudite founder and CEO Johann de Bruin.
Research institute Trade & Industrial Policy Strategies senior economist Gaylor Montmasson-Clair agrees, stating that, considering the forecasts, “it is pretty clear that we are looking at a growth factor by anywhere between five and seven by 2030”.
He adds that the demand is primarily driven by markets like the US, China and Europe, and that “there will be growth everywhere”.
However, considering that the bulk of the demand today and going forward will be in the mobility space, or EVs, Montmasson-Clair says this provides an opportunity for countries such as South Africa to tap into the opportunities the market provides through the minerals endowment, and the manufacturing of batteries, “notably for the automotive industry, but not only”.
“There is an opportunity for us to shift from mining to beneficiation by processing minerals locally to produce battery minerals for components such as cathodes, anodes, separators and electrodes. [There] are already some local companies involved in this (in manganese and vanadium, for instance),” he comments.
He adds: “It’s important to recognise that beneficiation can only take us so far. The price sensitivity (to individual mineral prices) of batteries is low, and the increasing price of minerals has a small impact on the overall cost of the final product. Nonetheless, it’s crucial for us to maximise the benefits of our minerals through beneficiation.”
Another way to enter the battery market, he adds, is through the assembly industry, which he says is “vibrant in South Africa”.
He explains that various companies in the country already assemble lithium-ion batteries, and while they currently import battery cells from China, everything else is sourced locally. He highlights that industry needs to connect the battery value chain to South Africa’s automotive value chain.
“We need a partnership with the automotive OEMs to successfully build the lithium- ion battery value chain in South Africa, and the local automotive OEMs need the local battery to maintain their access to markets (particularly the EU).
“As the automotive industry in Africa continues to grow, it’s essential to maintain market access by producing locally and staying connected to the larger market,” he comments.
For example, to access the European market as a South African product, Montmasson-Clair says producers must abide by rules of origin, which require them to meet certain local-content levels of production.
“If we only manufacture the vehicle without producing the batteries, we will not meet these requirements. Thus, it is imperative that we begin producing the necessary components to maintain access to the European market. This presents a significant opportunity for us to expand our capabilities and expand our automotive value chains,” he elaborates.
However, he notes that achieving this goal will require continued collaboration with regional partners, some of whom are located outside South Africa, though he emphasises that “partnership with the automotive industry is paramount”.
“By working together to increase our production capabilities, we can make a bigger impact on the market.”
Further, speaking during a panel discussion in February, Economic Commission for Africa (ECA) acting executive secretary Antonio Pedro said that the shift to renewable- energy sources was a “resource-intensive path that requires greater production of a variety of minerals that are central to decarbonisation”.
Africa is home to many such minerals, with the Democratic Republic of Congo (DRC), for example, producing over 70% of the world’s cobalt. The DRC and Zambia together supply 10% of global copper, while Mozambique and South Africa hold significant reserves of graphite, platinum-group metals, lithium and others.
“We have clear opportunities not only from the global green mineral boom but also from our domestic achievements, such as the African Continental Free Trade Area, to facilitate the development of regional value chains for these green economy products,” Pedro said, noting that several innovative financing mechanisms had been developed to support initiatives such as the battery and EV value chains.
“In the last two decades, we have seen that, without the right enabling policies and incentives, commodity supercycles come and go, leaving our countries dependent on resource extraction,” said Pedro.
He deplored the fact that about 70% of the region’s exports were unprocessed commodities, a situation that could change with the right policies that prioritised industrialisation and value addition in mining and other resource sectors.
Mining companies are facing the challenge of achieving a balance between supply and demand in a growing market that is still undergoing stabilisation. To achieve this balance, they must significantly boost the production of critical commodities such as lithium, manganese, cobalt, nickel, and graphite to fulfil the current demand. Additionally, mining companies need to establish projects that can respond adequately to the market’s evolving demands.
Despite the potential rewards, mining projects still require substantial capital investments and extended periods to reach maturity. They also demand extensive experience and expertise and, as a result, countries seeking to capitalise on this opportunity must develop the necessary skills and knowledge that are specific to this intricate industry.
Aside from external expertise and technical skills, De Bruin notes that African countries will need additional support in the form of private-sector funding, State oversight, a skilled and trained local workforce, and intercontinental expertise from the best in the industry to help navigate complex industry standards and regulations.
“A diverse range of new mining projects have become viable because of the rapidly growing demand for battery commodities worldwide, which has resulted in increased profit potential. Projects that were previously unfeasible are now appealing to countries looking to grow their global economic reach, making this the opportune time to begin investing in the sector.”
However, African countries needed to own such projects and commit investment and appropriate funding for research on battery technology, University of Lubumbashi’s Jean-Marie Kanda said during the same panel discussion as Pedro.
ECA senior economist Jean Luc Matsaki Namegabe, meanwhile, told participants that the DRC presented an opportunity for the development of electric batteries and vehicles that was “not to be missed” because it would move Africa up the value addition ladder, with Africa the only region that did not currently manufacture electric batteries.
Montmasson-Clair underscores the need for supportive policies that will attract investment, highlighting the need to assist and support companies that require capital or financing to expand.
He also highlights the critical need for testing and certification capabilities, especially for mobility purposes. Currently, he explains, companies often must ship their products to Europe or the US to get certified, “which is not practical, and very costly and time consuming”.
“In terms of cracking the market, it is important to sit around the table with all the automotive companies and strike a partnership that will take us to the manufacturing of batteries in South Africa. It is crucial to use a strategic approach and focus on what makes sense rather than trendy or sexy ideas,” he states.
He advises that, before focusing on developing battery cells, steps should be taken to build battery manufacturing and its value chain, as well as mineral refining capabilities.
“There is a need for a real intentional strategy around mineral beneficiation, which can be achieved at the regional level, not just for the benefit of South Africa, but the whole region,” he says.
“This is a crucial opportunity that we cannot afford to miss. We must approach it with intention and purpose, and I believe we have already put in significant effort towards this goal. We need to consider what specific actions need to be taken to achieve success, and we must all act urgently to make progress,” Montmasson- Clair says, adding that “the opportunity is vital” for Africa, especially given the potential for vanadium to be used for stationary energy–storage purposes, amid the growing use of renewable energy continentwide.